2025-03-25; City Council; 05; Change in Scope of Work for the Sewer Line Capacity Improvements Project

CA Review CKM
Meeting Date: March 25, 2025
To: Mayor and City Council
From: Geoff Patnoe, City Manager
Staff Contacts: Dave Padilla, Utilities Assistant Director [email protected], 442-339-2356
Markus Mohrle, Utilities Senior Engineer
[email protected], 442-339-2322
Subject: Change in Scope of Work for the Sewer Line Capacity Improvements Project
District: 2
Recommended Action
Adopt a resolution approving a change in the scope of work for the Sewer Line Capacity Improvements
Project, Capital Improvements Program Project No. 5548.

Executive Summary
The city’s 2019 Sewer Master Plan Update identified five sites in the wastewater collection system tha t require additional conveyance capacity. These sites are components of Capital Improvement Program Project No. 5548, Sewer Line Capacity Improvements Project. The sewer gravity main in Poinsettia Lane, west of Mica Road, is one of those sites. Due to increased sewer demand from existing users, recent changes in the city’s sewer design criteria and anticipated ne
ed to accommodate planned development density, the extent of pipe replacement for the Poinsettia Lane sewer main has increased from approximately 740 feet to approximately 2,600 f
eet.

Staff recommend that the Cit y Council approve a change in the scope of work for Project No. 5548 to include the expanded extent of pipe replacement for the Poinsettia Lane sewer main, in
creasing it to approximately 2,600 lineal feet from the Poinsettia Sewer Lift Station ea stward toward Mica Road.

Explanation & Analysis
The 2019 Sewer Master Plan Update evaluated the wastewater collection system capacity using a computer mod el and flow monitoring in selected locations citywide. The study identified five projects that needed additional capacity to meet the development density projected for year 2040, when the city is forecast to be built out. The sewer gravity main in Poinsettia Lane, west of Mica Road, is one of those five sites, which required the replacement of approximately 740 feet of 12-inch diameter sewer pipe with 15-inch and 18-inch diameter pipe. (A location map is provided as Exhibit 2.)
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Docusign Envelope ID: 91F77BD7-30E8-4C0C-9D00-8F68D3FB1CCF Staff revised the sewer design criteria contained in the Carlsbad Engineering Standards in 2024 to conform with regional and industry health and safety standards for flow depth and sewer generation rate.

There has also been an increased need for sewer capacity from existing users, as well as the anticipated need to accommodate the planned development density identified in the city’s 2021-2029 Housing Element, the portion of the city’s General Plan that addresses housing needs.

The change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand to approximately 2,600 lineal feet.

Staff are requesting the City Council’s authorization of the expanded project scope in advance of the fiscal year 2025-26 Capital Improvement Program budget process to allow design and environmental studies to proceed expeditiously. Sufficient funding is available for these studies in the project’s budget. The goal is to award a construction contract before summer 2026 to reduce potential construction impacts to the nearby Poinsettia Elementary School.

Staff will return to the City Council upon completion of design and preparation of an engineer’s estimate to request an additional appropriation to fund construction of the project. 1 Fiscal Analysis
The preliminary cost estimate to replace the Poinsettia Lane sewer is estimated to be $4.2 million. This project is a component of the Sewer Line Capacity Improvements Project, Capital Improvement Program Project No. 5548, and is funded, in part, by the Sewer Replacement Fund. The current available funding for the Poinsettia Lane sewer replacement project is $990,381.

The Poinsettia Lane sewer main is in the city’s Sewer Benefit Area H, which is a separate funding source and has $430,283 in funds that may be available for the project, subject to the preparation of a revised engineering report and authorization by the City Council for use of those funds. Any future development project in the area would pay the sewer capacity fees required in this benefit area to fund the development’s proportionate share of sewer capacity.

Based on an engineer’s estimate upon completion of final design, staff will return to the City Council with necessary and appropriate funding options.

Next Steps
Upon the City Council’s approval, staff will initiate the project’s design and environmental review and prepare an engineer’s estimate for the revised project. Staff plan to return to the City Council in early 2026 to request it approve the plans, specifications and contract documents, authorize bidding on the project and approve the additional appropriation that will be needed for construction.
1 An engineer’s estimate is an opinion of a project’s probable construction cost given by an experienced and qualified professional engineer generally familiar with the construction industry. Staff use them to obtain an estimate that will be as close to the actual costs as possible.

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Docusign Envelope ID: 91F77BD7-30E8-4C0C-9D00-8F68D3FB1CCF Construction is estimated to begin in May 2026, with trench excavations near Poinsettia Elementary School deferred to the start of the school summer break in June. Construction is expected to be completed by the end of 2026, which may be revised upon completion of the design.

Environmental Ev aluation
In accordance with the city’s California Environmental Quality Act procedures and CEQA Guidelines sections 15080 through 15097, a Program Environmental Impact Report (PEIR), State Clearinghouse No. 2012021006 (City Planning Case No. EIR 12-01), was certified as complete on Nov. 13, 2012 by the City Council for the Sewer Master Plan and Carlsbad Municipal Water District Water Master Plan and Recycled Water Master Plan Updates (Resolution No. 2012- 245). A first addendum to the Final EIR 12-01 was prepared for the 2019 Master Plan Update and adopted on Sept. 17, 2019 (Resolution No. 2019-183). Pursuant to CEQA Guidelines section 15168, the request to approve a change in the scope of work for CIP No. 5548 is within the scope of the Project covered by a previously certified PEIR and no new environmental document is required. There is no public review period required. The effects of the Project were examined in the PEIR and Addendum and all feasible mitigation measures and alternatives developed in the PEIR are incorporated into the resolution approving the change in the scope of work for CIP No. 5548. Further, since no changes to the PEIR or Addendum are necessary to support the Project, the city is not required to prepare an Addendum or Supplemental EIR to the PEIR per State CEQA Guidelines section 15164. Therefore, the prior PEIR is sufficient to support the proposed action. No further analysis or environmental documentation is required.

Exhibits

1. City Council resolution

2. Location map
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Docusign Envelope ID: 91F77BD7-30E8-4C0C-9D00-8F68D3FB1CCF Exhibit 1
RESOLUTION NO. 2025-072 .

A R

ESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,

CALIFORNIA, APPROVING A CHANGE IN THE SCOPE OF WORK FOR THE

SEWER LINE CAPACITY IMPROVEMENTS PROJECT, CAPITAL IMPROVEMENT PROGRAM PROJECT NO. 5548
WHE
REAS, the City Council of the City of Carlsbad, California, has determined it necessary, desirable and in the public interest to complete the Sewer Line Capacity Improvements Project, Capital Improvement Program, or CIP, Project No. 5548, or Project; and WHEREAS, the 2019 Sewer Master Plan Update identified five sites in the wastewater collection system that require additional conveyance capacity, and these sites are components of CIP Project No. 5548, Sewer Line Capacity Improvements Project; and
WHEREAS, the Poinsettia Lane sewer gravity main is recommended for pipe replacement in the 2019 Sewer Master Plan Update; and
WHEREAS, in May 2024, the City Engineer revised the sewer design criteria and the sewer generation rate for multi-family developments in the Carlsbad Engineering Standards for conformance with regional and industry design standards; and
WHEREAS, in January 2024, the City Council approved the rezoning of 16 properties in Carlsbad to meet state housing requirements; and
WHEREAS, additional development units in Bressi Ranch will increase the sewer demand to the Poinsettia Lane sewer gravity main; and
WHEREAS, staff recommend replacement of the Poinsettia Lane sewer gravity main to provide capacity to meet the build-out development density identified in the 2019 Sewer Master Plan Update as well as the additional projected development units in Bressi Ranch , and increasing the pipe replacement limits in Poinsettia Lane from approximately 740 lineal feet to approximately 2,600 lineal feet, commencing at the Poinsettia Sewer Lift Station and extending eastward toward Mica Road.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as f
ollows:

1. That the above recitations are true and correct.

2. That pursuant to CEQA Guidelines section 15168, this project is covered by a previously certified Program EIR (EIR 12 -01, Nov. 13, 2012; and First Addendum, Sept. 17, 2019), which serves as a Program EIR (PEIR) for the proposed Project. The effects of the Project March 25, 2025
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Docusign Envelope ID: 91F77BD7-30E8-4C0C-9D00-8F68D3FB1CCF were examined in the PEIR and all feasible mitigation measures and alternatives developed in the PEIR are incorporated into this Project and are hereby adopted as conditions of approval in Attachment A.

3. That no subsequent environmental document shall be prepared for the Project unless (1) Substantial changes are proposed in the Project which will require major revisions of the certified PEIR; (2) Substantial changes occur with respect to the circumstances under which the Project is undertaken which will require major revisions of the certified PEIR; or (3) New information of substantial importance, which was not known at the time the PEIR was certified as complete.

4. That the City Council independently and jointly reviewed and analyzed the PEIR and the scope of the proposed Project, and these documents reflect the independent judgment of the City Council and the city as the Lead Agency for the project. The City Council considered all significant impacts, mitigation measures, project alternatives identified in the certified PEIR, and considered all written and oral communications from the public regarding the environmental analysis, and found that (1) The Project falls u nder the scope of the certified PEIR pursuant to CEQA Guidelines section 15162; (2) The Project is consistent with applicable local land use plans and zoning; (3) All significant impacts were adequately addressed in the PEIR; (4) The Project would not make a considerable contribution to a new significant cumulative impact; and (5) None of the triggers for subsequent/supplemental EIRs, Negative Declarations or Mitigated Negative Declarations in CEQA apply. The Project is, therefore, determined to within the scope of the PEIR and the PEIR satisfies all requirements of CEQA for this later activity.

5. That the custodian of the documents and other materials which constitute the record of proceedings upon which this decision is based is the Office of the City Clerk of the City of Carlsbad, 1200 Village Drive, Carlsbad, CA 92008

6. That the City Council approves the change in scope for the Sewer Line Capacity Improvements Project, CIP Project No. 5548, increasing the pipe replacement limits from approximately 740 lineal feet to approximately 2,600 lineal feet.

March 25, 2025
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Docusign Envelope ID: 91F77BD7-30E8-4C0C-9D00-8F68D3FB1CCF PASSED, APPROVED AND ADOPTED at a Regula r Meeting of the City Council of the Cit y of Carlsbad on the 25th day of March 2025, by the following vote, to wit:

AYES: Blackburn, Bhat-Patel, Acosta, Burkholder, Shin.

NAYS: None.

ABSTAIN: None.

ABSENT: None.
_______
_______________________________
KEITH BLACKBURN, Mayor
_______
_______________________________
SHERRY FREISINGER, City Clerk
(SEAL)
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Docusign Envelope ID: 91F77BD7-30E8-4C0C-9D00-8F68D3FB1CCF

At tachment A
Statement of Reasons for
Streamlined Review and
Exemption from Additional Environmental Review Checklist Pursuant to CEQA Guidelines §15168
Da
te: March 18, 2025
Project Title: Capital Improvement Program Project No. 5548 Sewer Line Capacity Improvements Project
Planning Case No.: EIA 2025-0002
GP Designation: N/A (Public Right-of-Way)
Zoning: N/A (Public Right-of-Way)
S
taff Contact: Mike Strong - (442) 339-2721
[email protected]

1. I
ntroduction
Thi
s California Environmental Quality Act (CEQA) Analysis evaluates environmental impacts from the design, engineering, and construction of Capital Improvement Program Project No. 5548 ( sewer line capacity improvements for an existing gravity main in Poinsettia Lane, west of Mica Road). The extent of pipe replacement for the Poinsettia Lane sewer main has increased from approximately 740 feet to approximately 2,600 feet ( hereinafter referred to as the “ Project”). Documentation herein has been prepared by the City of Carlsbad (city) as Lead Agency in full accordance with the procedural and substantive requirements of CEQA and the CEQA Guidelines.

Thi
s CEQA Analysis uses streamlining and tiering in accordance with CEQA Guidelines 15168 for consistency with the Final Environmental Impact Report (Final EIR) prepared for the Sewer Master Plan and Carlsbad Municipal Water District Water Master Plan and Recycled Water Master Plan Updates (Master Plan Updates).

The Final EIR (State Clearinghouse No. 2012021006; City Planning Case No. EIR 12-01), was certified as complete on Nov. 13, 2012 by the City Council for the Sewer Master Plan and Carlsbad Municipal Water District Water Master Plan and Recycled Water Master Plan Updates (2012 Master Plan Update; Resolution No. 2012-245). A first addendum to the Final EIR 12-01 w as prepared in 2019 for the Master Plan Update and adopted on Sept. 17, 2019 (2019 Master Plan Update; Resolution No. 2019-183).

The 2012 M
aster Plan Update, 2012 Master Plan Update EIR, 2019 Master Plan Update, and 2019 Master Plan Update EIR First Addendum are incorporated by reference in this document, pursuant to State CEQA Guidelines Section 15150.

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CIP Pro ject No. 5548
EIA 2025-0002
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2. P
roject Location and Description
2A
. Project Location
C
MWD’s service areas for the water and recycled water do not coincide with the City’s municipal boundary. The city provides these services throughout the Northeast, Northwest and Southwest quadrants, but serves only a portion of the Southeast quadrant. The CMWD covers an area of 20,682 acres, approximately 32 square miles, and provides potable and recycled water supply to most of the city. CMWD’s service area covers approximately 82 percent of the city’s boundary. The southeast portion of the city is served by Olivenhain Municipal Water District (OMWD) and a small area to the east by Vallecitos Water District (VWD). Currently, CMWD obtains 100 percent of its potable water supply from the San Diego County Water Authority (SDCWA), of which it is one of 24-member agencies.

The Cit
y of Carlsbad (city) provides wastewater collection service to 29 square miles, approximately 74 percent of the city limits, through 6 interceptor pipelines, approximately 265 miles of collection and conveyance pipelines, and 11 lift stations (LS). All wastewater flows are conveyed to the Encina Water Pollution Control Facility (EWPCF), located in Carlsbad, for treatment and then disposal through the ocean outfall or delivery to the adjacent Carlsbad Water Recycling Facility for reuse. Several interceptors are jointly owned with Carlsbad and convey outside agency flows to the EWPCF in addition to flows generated within the Carlsbad service area.

The Master Plan Updates provide a system evaluation and capacity assessment of the potable water system and sewer collection and recommends a capital improvement program to provide for continued reliable water and sewer services through buildout conditions, which are projected to occur by 2040. The Project, which is a sewer gravity main in Poinsettia Lane, west of Mica Road, is one of the sites, which needs to be replaced and upsized.

Under
the proposed 2019 Sewer Master Plan Update, the city identified eight sewer pipeline rehabilitation projects, six sewer collection capacity projects, five interceptor capacity projects, and eight operations and maintenance projects. The 2019 Sewer Master Plan requires the replacement of approximately 740 feet of 12- inch diameter sewer pipe with 15 -inch and 18- inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln . near Poinsettia Elementary. (A location map is provided below.)
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CIP Pro ject No. 5548
EIA 2025-0002
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FIGURE 1: LOCATION MAP
Capital Improvement Program Project No. 5548
2 B. Project Description
The
2019 Sewer Master Plan (portion of the 2019 Master Plan Update) addresses model results for the Carlsbad collection system gravity mains, lift stations, and force mains. Based on the evaluation criteria, gravity mains were considered over capacity if the design standards for relative depth and relative flow were exceeded (d/D of 0.8 and q/Q of 1.0). Based on this criteria, four gravity mains were found to exceed capacity including the Poinsettia Lane Deficiencies (mains SWM4793, SWM6349) 12- inch mains in Poinsettia Lane west of the intersection of Mica Road (CIP Project No. C-6). This is also known as Capital Improvement Project (CIP) No. 5548.

S
ince 2019, there has been an increased need for sewer capacity from existing users, as well as the anticipated need to accommodate the planned development density identified in the city’s 2021-2029 Housing Element, the portion of the city’s General Plan that addresses housing needs. Moreover, the City Engineer revised the sewer design criteria contained in the Carlsbad Engineering Standards in 2024 to conform with regional and industry health and safety standards for flow depth and sewer generation rate. The change in design criteria, in combination with the increased current demand and the anticipated future needs, forms the basis or need for the Project, which requires the pipe replacement project to expand to approximately 2,600 lineal feet. The details of the request represent March 25, 2025
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modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

3. O
verview of Applicable CEQA Provisions and Findings
The f
ollowing discussion presents the relevant provisions of CEQA for a review of environmental impacts of the Project. It provides an overview of the determination of consistency with the city’s program level EIR, a description of how the Project complies with each provision, and concludes with the CEQA finding and determination that the Project is exempt from further environmental review. Additionally, the following discussion addresses topics that have been added to the CEQA Appendix G checklist subsequent to the certification of the Program EIR.

CEQA provides that once an EIR has been completed and certified for a project, no additional environmental review need be completed even if the project requires a further discretionary approval, as long as the agency demonstrates that no new or more severe impacts will result. Moreover, because of CEQA’s policy favoring prompt resolution of challenges to agency decisions and the related presumed validity of unchallenged CEQA documents, the deferential standard also applies when an agency proposes to reuse an EIR for related subsequent discretionary approvals. 3A. M
aster Plan Update Program Environmental Impact Report and Addendum In accordance with CEQA and CEQA Guidelines, a Program EIR (EIR 12-01) for the 2012 Master Plan (State Clearinghouse No. 2012021006), was certified as complete by the City Council on Nov. 13, 2012 (Resolution No. 2012-245. A first addendum to the Final EIR 12-01 was prepared in 2019 for the Master Plan Update and adopted on Sept. 17, 2019 (Resolution No. 2019-183).

For
the 2019 Master Plan Update, the hydraulic model used in the previous (2012) Master Plan was updated with regard to infrastructure, flow loading, and rainfall derived inflow and infiltration ( RDII) to represent: 1) Existing System Hydraulic Model – Updated to represent the 2017 collection system and calibrated based on available information; 2) Near -Term System Hydraulic Model – Calibrated existing system model updated with near- term improvement projects and used to identify potential capacity constraints; and 3) Buildout System Hydraulic Model – Updated with projected buildout flows and improvement projects and used to identify potential future capacity constraints.

The des
ign criteria for gravity sewers provided unoccupied space at the top of the pipe for conveyance of sewage gasses and to provide contingent capacity for wet weather inflow and infiltration. At the time of preparation, us ing a d/D ratio of 0.5 for small diameter pipes and 0.75 for larger diameter pipes for peak dry weather flow was considered. However, with the potential for RDII, using a d/D ratio of 0.80 for capacity evaluation of the system during PWWF was utilized as the approach. It was noted in the 2019 Sewer Master Plan that if RDII is reduced significantly in future years, the alternative standard may become appropriate.

The c
ertified Program EIR and First Addendum assesses potentially significant environmental impacts ass
ociated with implementation and build out of the Master Plan Update s, which included t he sewer gravity main in Poinsettia Lane, west of Mica Road. This section of replacement is one of the four sites, which required the replacement of approximately 740 feet of 12-inch diameter sewer pipe with 15- inch and 18-inch diameter pipe. The Program EIR serves as a programmatic document that is intended to be used to evaluate subsequent projects and activities within the planning area. Resolution No. 2012-245 and Resolution No. 2019-183 approved t he Mitigation Monitoring and Reporting Program and the findings and conditions were adopted by reference.

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The Program EIR provides for streamlining and/or tiering opportunities under CEQA Guidelines Section 15168. CEQA Guidelines Section 15168(c) provide that “later activities in the program must be examined in the light of the program EIR to determine whether an additional environmental document must be prepared.”
A
list of applicable mitigation measures from the Master Plan Updates was re- adopted with the 2019 Master Plan Update EIR Addendum. All mitigation measures adopted as part of the city for the previously approved Master Plan Update (2012 Master Plan Update EIR) “continued to apply to the proposed Master Plan [list of CIP projects] in conjunction with the city’s Tribal, Cultural, and Paleontological Resource Guidelines…” The city is responsible for adopting and implementing the approved mitigation. Additionally, the city has incorporated numerous project design features and construction measures into the project design that are included in an effort to reduce the potential for environmental effects. The CIP projects, including the proposed Project, need to incorporate the applicable project design features that are listed at the end of the MMRP.
3 B. Applicability of the Project to 15168
The Project is a “later activity” of the Program EIR. Section 4 of this CEQA Analysis provides an assessment of the P roject’s environmental impacts relative to what was analyzed in the Program EIR.

The extent of pipe replacement for the Poinsettia Lane sewer main has increased from approximately 740 feet to approximately 2,600 feet . As described in Section 4, the Project does not result in environmental effects that were not previously examined. As such, pursuant to CEQA Guidelines Sections 15162 and 15163, no subsequent or supplemental EIR is required. In accordance with CEQA Guidelines Section 15168(c)(2), the city can “approve the activity as being within the scope of the project covered by the Program EIR, and no new environmental document would be required.” CEQA Guidelines, Section 15162(a), states that a subsequent document shall be prepared if substantial changes are proposed in the Project or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. A subsequent document may also be required when new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted, shows that (a) the project will have one or more significant effects not discussed in the prior document, (b)
s
ignificant effects previously examined will be substantially more severe than shown in the prior document, (c) mitigation measures or alternatives previously found not to be feasible would in fact be f
easible and would substantially reduce one or more significant effects of the project but the project proponents decline to adopt the mitigation measure or alternative, or (d) mitigation measures or alternatives that are considerably different from those analyzed in the prior document would substantially reduce one or more significant effects on the environment but the project proponents decline to adopt the mitigation measure or alternative. Thus, CEQA Guidelines Section 15162 clarifies that a subsequent EIR or supplemental EIR is only required when "substantial changes" occur to a project or the circumstances surrounding a project, or "new information" about a project implicates "new significant environmental effects" or a "substantial increase in the severity of previously significant effects." In evaluating whether these thresholds are met, the key is to determine if any circumstances have changed enough to justify repeating a substantial portion of the environmental documentation process.

The c
onstruction and operational characteristics of the proposed Master Plan Updates (including the proposed Project) have not changed since the certification of the PEIR and adoption of the Addendum.

The Master Plan Updates would continue to improve access to the city’s existing sewer infrastructure and replace and upgrade existing sewer lift stations, which would provide desirable benefits in terms of minimizing and avoiding sewer system overflows (life and safety hazards).

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CEQA Guidelines Section 15168(c)(3) provide that “an agency shall incorporate all feasible mitigation measures and alternatives developed in the program EIR into later activities in the program.” Section 5 of this CEQA analysis identified the relevant environmental conditions of approval that will be required of the proposed project to demonstrate compliance with mitigation measures set forth in the Program EIR, and policies, programs and goals of the Specific Plan. As described below in Section 4, for each environmental resource topic in the Environmental Checklist, with implementation of mitigation measures, the Project would not result in significant impacts beyond those analyzed in the Program EIR. Moreover, as noted in Section 3A, the city has incorporated numerous project design features and construction measures into the project design that are included in an effort to reduce the potential for environmental effects. The following analysis makes reference to applicable project design features that are listed at the end of the MMRP to the 2012 Master Plan Update EIR Addendum.

I
n addition, under applicable state and federal law, the city is empowered to control access to and use of its public rights-of-way, and unless specifically pre-empted by state or federal law, to obtain reasonable and fair compensation for the use of its public rights -of-way. This shall include, but not be limited to, provisions for public utilities, electricity, gas, cable service, information services, sewer, storm drains, water, telecommunications, traffic controls, transit, video, or other similar servi ces that may require or request placement of facilities in the public right-of-way. Each excavation in the public right-of-way shall be performed in accordance with the Carlsbad Municipal Code (CMC ; Chapter 11.16 ) and with the standard plans and specifications of the Engineering Standards or regulations, except where the City Engineer, at his or her discretion, grants prior written approval to deviate from the standard plans and specifications, orders, or regulations. Each public right -of-way permit is s ubject to the criteria and provisions of the CMC. The public right -of-way permit shall be promptly issued upon review of a completed application and a determination by the City Engineer that company has complied or will comply with all applicable requirements of the CMC. Any approval of a permit may require modifications to the proposed activities pursuant thereto as a result of the City Engineer’s consideration of the factors set forth above, including by limiting or changing the number, size, color and location of the improvements proposed to be installed. In this instant, the City Engineer revised the sewer design criteria contained in the Carlsbad Engineering Standards in 2024 to conform with regional and industry health and safety standards for flow depth and sewer generation rate. The City Engineer is now us ing a d/D ratio of 0. 75 for the wet weather, relative depth design criteria and conveyance assessment. There has also been an increased need for sewer capacity from existing users (existing commitments), as well as the anticipated need to accommodate the planned development density identified in the city’s 2021- 2029 Housing Element, the portion of the city’s General Plan that addresses housing needs. The change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project limits to expand. The Project changes this section of pipe replacement from 740 lineal feet to 2,600 lineal feet.
3 C. Applicable Mitigation Measures
N
o applicable mitigation measures beyond those identified in Section 4, below. 3 D. Summary of Findings
The Pr
oject is consistent with the environmental analysis performed for the Program EIR and is, therefore, within the scope of the prior certified Program EIR and adopted Addendum. Further, the Program EIR and Addendum adequately anticipated and described the impacts of the Project and identified applicable mitigation measures necessary to reduce project -specific impacts . A comprehensive environmental evaluation has been completed for the Project (Section 4).

Thi
s CEQA Analysis demonstrates that the Project would not result in substantial changes or involve new information that would warrant preparation of a subsequent EIR because the level of development March 25, 2025
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proposed is within the development assumptions analyzed in the Program EIR and Addendum. With uniformly applied development standards, mitigation measures imposed as environmental conditions of approval, and standard regulatory requirements, the Project would not result in any new or more severe impacts relative to what was identified the Program EIR and Addendum.

The
conclusion identified in the P rogram EIR and Addendum remains accurate and applicable to the proposed Master Plans Updates and with the proposed Project . The Program EIR and Addendum adequately describes the activity for the purposes of CEQA. No further environmental review is required. 3/18/2025
Signature Date
Mike Strong Project Manager
Printed Name Title
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4. Overview of Applicable CEQA Provisions and Findings
Under CEQA Guidelines Section 15168, Program EIR, a lead agency does not need to reevaluate or recirculate an environmental document for a significant and unavoidable effect of a later activity if that activity is within the scope of the plan or program and the impact was covered in the Program EIR.

However, when using tiering, as described in CEQA Guidelines §15152, the lead agency needs to consider again the significant and unavoidable effects that were evaluated in a previous EIR to assess if they could now be mitigated and, if not, to inform adoption of CEQA findings and a statement of overriding considerations pursuant to CEQA Guidelines Sections 15091 and 15093.

C
EQA Guidelines Section 15168(c)(4) recommends using a written checklist or similar device to confirm whether the environmental effects of a subsequent activity were adequately covered in a Program EIR.

Accordingly, this section examines the Project’s potential environmental effects within the parameters outlined in CEQA Guidelines Section 15168. The “Prior EIRs” (as defined in CEQA Guidelines ) is the City of Carlsbad Master Plan Update Program EIR and Master Plan Update EIR Addendum, inclusive of all impac t determinations, significance thresholds and mitigation measures identified therein. The evaluation builds from the Appendix G Environmental Checklist and has been modified to reflect the parameters outlined in CEQA Guidelines Section 15168. The checkboxes in the evaluation below indicate whether the proposed Project would result in environmental impacts, as follows:
• N
ew Significant Impact – The proposed Project would result in a new significant impact that was not previously identified in the Program EIR.
• Subst
antial Increase in Severity of Previously Identified Significant Impact in Program EIR – The proposed Project’s specific impact would be substantially greater than the specific impact described in the Program EIR.
• S
ubstantial Change Relative to Program EIR – The proposed Project would involve a substantial change from analysis conducted in the Program EIR. • E
qual or Less Severity of Impact than Previously Identified in Program EIR – The severity of the specific impact of the proposed Project would be the same as or less than the severity of the specific impact described in the Program EIR.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

1. Aesthetics
– Would the Project:
a) Have a substantial adverse effect on a
scenic vista?
b) Substantially damage scenic resources,
including, but not limited to, trees, rock
outcroppings, and historic buildings within
a
s
tate scenic highway?
c) In nonurbanized areas, substantially
degrade the existing visual character or
quality of public views of the site and its
surroundings? If the project is i
n an
urbanized area, would the project conflict
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with applicable zoning and other regulations
governing scenic quality?
d) Create a new source of substantial light or
glare, which would adversely affect day or
nighttime views in the area?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to aesthetics.

I
mpacts to scenic vistas could occur from construction activities, including disturbance of ground cover, grading, excavation, material stockpiles, and the presence of construction equipment. The majority of the CIP projects would be contained to the publi c road right-of-way and located underground or co -located with existing storage facilities, resulting in minimal impacts to scenic vistas. The proposed water, sanitary sewer, and recycled water improvements, including the new limited access projects, would be contained in generally urbanized landscapes and public rights -of-way and would not have a substantial adverse effect on scenic vistas.

I
mpacts to scenic highways could occur from construction activities, including disturbance of ground cover, grading, excavation, material stockpiles, and the presence of construction equipment. As incorporated in the PEIR and Addendum, the projects would be required to follow project design features, including the following:
• D
emolition debris will be removed in a timely manner for off-site disposal. • Tree and vegetation removal will be limited to those depicted on construction drawings. • Disturbed areas will be restored following construction consistent with original site conditions and surrounding vegetation. If removed vegetation included invasive plant species, the restored area shall be revegetated with a mix of native, non -invasive plants that are compatible with the surrounding setting.

I
mplementation of these project design features and compliance with federal, state, and local requirements and regulations would limit impacts to a level less than significant.

Capital Improvement Program Project No. 5548
I
n this instant, the change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand from 740 lineal feet to approximately 2,600 lineal feet, all of which represents modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

The
modest changes associated with the Project carries the same anticipated construction mobilization needs,
traffic control planning, anticipated construction schedule, final completion date, and specific construction benchmark dates as what would otherwise be required with the former scope of CIP Project No. 5548 ( 740 lineal foot replacement project). Therefore, the Project ( pipe replacement extent of approximately 2,600 lineal feet), would not result in a new significant impact or substantially increase the March 25, 2025
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severity of a previously identified significant impact relative to the PEIR and Addendum. The city, acting as Lead Agency for the Project, is responsible for adopting and implementing the approved mitigation.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed, including for CIP Project No. 5548, would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

Furt
her environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to aesthetics; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR and Addendum.

Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum. The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity
of Impact

2. Agriculture/Forestry Resources
– Would the Project:
a) Convert Prime Farmland, Unique Farmland,
or Farmland of Statewide or Local Importance
as shown on the maps prepared pursuant t
o
t
he Farmland Mapping and Monitoring
P
rogram of the California Resources Agency,
to non-agricultural use?
b) Conflict with existing zoning for agricultural
use, or a Williamson Act contract?
c) Conflict with existing zoning for, or cause
rezoning of, forest land (as defined in Public
Resources Code §12220(g)), timberland (as
defined by Public Resources Code secti
on
4526)
, or timberland zoned Timberland
Production (as defined by Government Code
§51104(
g))?
d) Result in the loss of forest land or
conversion of forest land to non-forest use?
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e) Involve other changes in the existing
environment, which, due to their location or
nature, could result in conversion of Important
Farmland or other agricultural resources, to
non-agricultural use?

Discussion

Master Plan Updates

The PEIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The analysis indicated there would not be any impact to agriculture/forestry.

As provided, there are only a limited number of areas within Carlsbad that include important farmlands as defined by the California Department of Conservation with the Study Area consisting of mainly of Urban and Built-Up Land along the western, southern, and northwestern portions of the city, with large areas of “Other Land” interspersed throughout the eastern and central portions. The proposed water, sanitary sewer, and recycled water improvements, including the new limited access projects, would be contained in generally urbanized landscapes and public rights-of-way and would not have a substantial adverse effect on the remaining agricultural areas within the city.

Capital Improvement Program Project No. 5548

In this instant, the change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand from 740 lineal feet to approximately 2,600 lineal feet, all of which represents modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

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Conclusion
A
s discussed above, the Project would not result in any significant impacts to agriculture/forestry; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR and Addendum. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum . The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

3. A ir Quality
– Would the Project:
a) Conflict with or obstruct implementation
of the applicable air quality plan?
b) Result in a cumulatively considerable
net increase of any criteria pollutant for
which the project region is non-attainment
under an applicable federal or state
am
bient air quality standard?
c) Expose sensitive receptors to
substantial pollutant concentration?
d) Result in other emissions (such as
t
hose leading to odors) adversely affecting
a substantial number of people?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to air quality.

The existing regulatory framework governing air quality planning in the Study Area has not substantially changed since the certification of the PEIR. The San Diego Air Basin continues to be in attainment for carbon monoxide (CO), nitrogen dioxide (NO2), lead, and sulfur dioxide (SO2), attainment/unclassifiable for (PM2.5) and (PM10), and non- attainment for ozone (8- hour) with respect to federal air quality standards. With respect to state air quality standards, the San Diego Air Basin continues to be in attainment for CO, NO2, lead, SO2, and non- attainment for ozone, PM2.5 and PM10. The Master Plan Updates would not result in population growth that would exceed the population projections accounted for in the Regional Air Quality Strategy and State Implementa tion Plan. Furthermore, the construction and operational characteristics as described in Section 4.2 have not substantially changed since the certification of the PEIR and adoption of the Addendum.

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As provided in Section 4.2 of the PEIR, construction of the CIP projects proposed under the Master Plans would result in temporary increases in air pollutant emissions. These emissions would be generated in the form of fugitive dust emissions (PM10 and PM2.5) and ozone precursor emissions (NOx, volatile organic compounds). Operation of heavy equipment and vehicles during the construction phases would generate exhaust emissions from fuel combustion. Fugitive dust emissions would be generated from earth disturbance during site grading and structure demolition, as well as from construction vehicles operating on vacant areas or dirt roadways within or adjacent to CIP construction sites. The city has committed to implementing best management practices (BMP), identified as project design features in the MMRP, to reduce fugitive dust emissions and other criteria pollutant emissions during construction of CIP projects. The PEIR and Addendum contemplated the construction of the Master Plan(s) CIP projects would take place to year 2035. The PEIR and Addendum estimated the construction emissions for the overall Master Plan Update using worst-case assumptions, which considered simultaneous construction of multiple projects covered under the Master Plans. Based on the fact that emissions calculated at the programmatic level for the Master Plans were determined less than significant and the proposed Master Plan Updates would result in an overall reduction of water use and corresponding CIP improvements as compared to 2012, the proposed Master Plan Updates would not exceed San Diego Air Pollution Control District’s significance thresholds and therefore would be less than significant.

The po
tential impacts associated with a cumulatively considerable net increase of criteria pollutants were analy
zed in the PEIR (Section 4.2, Air Quality) and Addendum. The city has committed to implementing BMPs, identified as project design features in the MMRP, to reduce fugitive dust emissions and other criteria pollutant emissions during construction of CIP projects. With the implementation of BMPs contained in the MMRP, the PEIR and Addendum determined that the Master Plans would result in a less than significant impact. Further, most of the CIP projects would be new or upgraded pipelines, which would be passive following construction, or improvements to existing facilities that would not result in new sources of criteria pollutants. New pumps and emergency generators that would be installed as a result of the CIP projects would be electric rather than fuel- consuming. During facility operation, occasional vehicle trips may be required for repair or inspection and periodic maintenance. The PEIR and Addendum determined operation air pollutant emission impacts associated with the proposed CIP projects, including for CIP Project No. 5548, would be less than significant.

The potent
ial impacts associated with exposure of sensitive receptors to pollutant concentrations were analyzed in the PEIR (Section 4.2, Air Quality) and Addendum. The PEIR and Addendum determined that the CIP projects covered under the Master Plans would not expose sensitive receptors to substantial pollutant concentrations and a less than significant impact would occur.

The pot
ential impacts associated with odors were analyzed in the PEIR (Section 4.2, Air Quality) and Addendum. The Master Plan Updates include CIP projects (e.g. I-2) that would further eliminate sources of odor in compliance with San Diego Air Pollution Control District Rule 51. The PEIR and Addendum determined that the Master Plans would not create objectionable odors and a less than significant impact would occur.

The
following BMPs would be implemented to minimize fugitive dust emissions and other criteria pollutant emissions during construction of CIP projects:
• Water or dust control agents will be applied to active grading areas, unpaved surfaces, and dirt stockpiles as necessary to prevent or suppress particulate matter from becoming airborne. All soil to be stockpiled over 30 days will be protected with a secure tarp or tackifiers to prevent windblown dust.
• Covering/tarping will occur on all vehicles hauling dirt or spoils on public roadways unless additional moisture is added to prevent material blow-off during transport. • Dirt and debris spilled onto paved surfaces at the project site and on the adjacent roadway will March 25, 2025
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be swept or vacuumed and disposed of at the end of each workday to reduce resuspension of particulate matter caused by vehicle movement. During periods of soil export or import, when there are more than six trips per hour, dirt removal from paved surfaces will be done at least twice daily.
• Disturbed areas will be revegetated as soon as work in the area is complete. • Electrical power will be supplied from commercial power supply wherever feasible, to avoid or minimize the use of engine-driven generators.
• Air filters on construction equipment engines will be maintained in clean condition according to manufacturers’ specifications.
• The construction contractor will comply with an approved traffic control plan to reduce non- project traffic congestion impacts. Methods to reduce construction interference with existing traffic and the prevention of truck queuing around local sensitive receptors will be incorporated into this plan.
• Staging areas for construction equipment will be located as far as practicable from residences. • Trucks and equipment will not idle for more than 15 minutes when not in service.

C
apital Improvement Program Project No. 5548
I
n this instant, the change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand from 740 lineal feet to approximately 2,600 lineal feet, all of which represents modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to air quality ; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR and Addendum.

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Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

4. Biological Resources
– Would the Project:
a) Have a substantial adverse effect, either
directly or through habitat modifications, on
any candidate, sensitive, or special status
species in local or regional plans, policies, or
regulations, or by the California Department
of Fish and Wildlife or U.S. Fish and Wildlif
e
S
ervice?
b) Have a substantial adverse effect on any
riparian habitat or other sensitive natural
community identified in local or regional
plans, policies, regulations or by the
California Department of Fish and Wildlife or
US Fish and Wildlife Service?
c) Have a substantial adverse effect on state
or federally protected wetlands (including,
but not limited to, marsh, vernal pool,
coastal, etc.) through direct removal, filling,
hydrological interruption, or other means?
d) Interfere substantially with the movement
of any native resident or migratory fish or
wildlife species or with established native
resident or migratory wildlife corridors, or
impede the use of native wildlife nursery
sites?
e) Conflict with any local policies or
ordinances protecting biological resources,
such as a tree preservation policy or
ordinance?
f) Conflict with the provisions of an adopted
Habitat Conservation Plan, Natural
Community Conservation Plan, or other
approved local, regional, or state habitat
conservation plan?
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Discussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

S
ection 4.3, Biological Resources, of the PEIR provided a programmatic evaluation of potential impacts, either directly or through habitat modifications, on plant and wildlife species identified as a candidate, sensitive, or special status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Wildlife or U.S. Fish and Wildlife Service. Appendix B of the PEIR includes a tabular listing of the special status species considered in 2012, which in all cases has not changed since 2012. An updated species list was requested from the U.S. Fish and Wildlife Service (2019) to confirm current listings and is included in Appendix B. Tables 4.3 -3 and 4.3-4 in the PEIR identify projects that would occur within Carlsbad and be subject to the conditions of Carlsbad’s Habitat Management Plan (HMP) and associated species avoidance, minimization, and compensatory mitigation requirements. The Carlsbad HMP was in part developed to set aside land in preservation to use as mitigation for future projects. Based on the programmatic evaluation, the special status species with potential to be impacted by CIP projects within Carlsbad are all likely to be covered species or narrow endemic species under the Carlsbad HMP. Species not covered under the Carlsbad HMP are not likely to occur within the CIP project sites. Therefore, species not covered under the Carlsbad HMP are not likely to be adversely affected by CIP projects. Project-level surveys and/or avoidance and minimization measures were proposed for the CIP projects listed in Table 4.3- 3 to ensure that the appropriate measures are implemented to address special status species with the potential to occur, including projects that are not covered under the Carlsbad HMP per HMP Appendix B. Some of the CIP Projects continue to be identified to have direct or indirect impacts thereby requiring additional avoidance and minimization measures. Direct impacts include the direct take, removal, or displacement of special status species and their habitat through activities such as clearing, grubbing, grading, and other land disturbance activities. Removal of habitat could result in displacement of special status wildlife and less habitat available within a species’ range to carry out vital life history requirements such as breeding, foraging, dispersal, migration, aestivation (i.e., underground dormancy or torpor during the summer) and predator evasion. Construction activities could also result in the removal or trimming of trees and shrubs during the general bird nesting season (January 15 through September 15). Indirect impacts could also result in temporary increases in noise levels, which could adversely affect special status wildlife species occupying adjacent habitats, including nest failure.

These impacts were identified as significant in the PEIR. Implementation of Mitigation Measures Bio-1A through Bio-1I would reduce direct and indirect impacts on special species and their habitat to a less than significant level. The construction and operational characteristics of the CIP projects covered under the Master Plan Updates have not substantially changed since the certification of the PEIR so they were readopted as part of the Addendum. The conclusion identified in the PEI R remain ed accurate and applicable to the proposed 2012 Master Plan Updates.

A
s evaluated in Section 4.3 of the PEIR, construction of CIP projects have the potential to result in direct impacts to riparian habitat and several types of sensitive natural communities. Habitat loss or disturbance as a consequence of these CIP project construction activities could result in diminishing and degrading of open space areas, reductions, or eliminations of habitat functions and values, and impacts to species, among other adverse impacts. These direct impacts were identified as a significant in the PEIR prior to the implementation of mitigation. Implementation of Mitigation Measures BIO -2A and 2B would reduce direct impacts on special species and their habitat to a less than significant level (Mitigation Measure BIO-2B does not apply to CIP Project No. 5548). The regulatory requirements have not substantially changed since the certification of the PEIR and Addendum.

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The city is required to prepare and implement BMPs to minimize, control, and treat storm water runoff, fugitive dust, and other pollutants at the CIP construction site. Implementation of these required practices would reduce potential indirect impacts during construction to a less than significant level. Further, implementation of Mitigation Measures Bio- 1E, Bio-1F, Bio-1H, and Bio- 1I would prohibit construction activities from inadvertently encroaching into or otherwise impact potential jurisdictional wate rs and wetlands occurring adjacent to CIP project sites, thereby further reducing potential indirect impacts to a less than significant level.

C
IP projects located within the coastal zone (e.g. SR-22) would be subject to the Carlsbad Local Coastal Plan and Development Standards. The city and CMWD are required to comply with the Carlsbad HMP and provisions of the Carlsbad Local Coastal Plan, including the Coastal Resource Protection Overlay Zone Ordinance. As required, potential impacts on sensitive species and habitats would be avoided or mitigated consistent with the Coastal Resource Protection Overlay Zone Ordinance and HMP.

Implementation of the proposed Master Plans were determined not to conflict with the adopted Coastal Resource Protection Overlay Zone Ordinance. Based on this circumstance and the reduction in overall capacity of the proposed Master Plans, these impacts would be less than significant following the implementation of mitigation included in the MMRP.

P
ortions of the Study Area occur within the cities of San Marcos, Vista, and Oceanside; however, Draft Mul
tiple Habitat Conservation Program Subarea Plans have not yet been finalized or adopted by those agencies. Therefore, CIP projects, including for CIP Project No. 5548, are not required to demonstrate consistency and compliance with these Draft Multiple Habitat Conservation Program Subarea Plans. As evaluated above, there are CIP projects identified within the Master Plan Updates within Carlsbad that could result in potential impacts to sensitive species and habitat that are addressed within the Carlsbad HMP.

Capi
tal Improvement Program Project No. 5548
I
n this instant, the change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand from 740 lineal feet to approximately 2,600 lineal feet, all of which represents modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

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Conclusion
P
ursuant to CEQA Guidelines Sections 15162 and 15168, the request to construct the proposed Project is within the scope of the previously certified PEIR and Addendum, and there would be no additional impacts to biological resources beyond those analyzed in the PEIR and Addendum. Portions of MMRP from the PEIR and Addendum related to biological resources are required to be implemented for the Project (Bio-1A through Bio-1I and Bio-2A).

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change Relative
to Program
Equal or
Less Severity
of Impact

5. Cultural Resources
– Would the Project:
a) Cause a substantial adverse
change in the significance of a
hi
storical resource as defined in
§15064.5?
b) Cause a substantial adverse
change in the significance of an
ar
chaeological resource pursuant to
§15064.5?
c) Disturb any human remains,
including those interred outside of
dedicated cemeteries?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

S
ection 4.4, Cultural and Paleontological Resources, of the PEIR provided a programmatic assessment of the potential impacts to historic resources based on the CIP project outlined in the 2012 Master Plans.

The PEIR notes various, existing built-environment historical resources (buildings or structures aged 45 years old or older) and numerous archaeological sites within the Study Area. The PEIR included a cultural resources records search to evaluate the presence of known historical and archaeological resources for areas potentially impacted by the Master Plans. Several historical, built -environment resources are known in the Study Area, including the Rancho de los Quiotes (Kiotes)/Leo Carrillo Ranch, which is a district listed in the National Register of Historic Places and California Register of Historic Resources.

This resource is located in the immediate vicinity of segments related to proposed Sewer Master Plan CIP Project SR-22.

Sec
tion 4.4 of the PEIR and Addendum provides an assessment of potential impacts of the Master Plan improvements to known and undocumented archaeological resources. Known cultural resources that may be affected by the construction of proposed CIP project sites are listed by Master Plan improvements in Tables 4.4-3 to 4.4-5 of the PEIR. Additionally, the PEIR and Addendum notes a high archaeological March 25, 2025
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resource sensitivity for the entire Study Area. A table that identifies which CIP projects would have the potential to impact each resource is available in Confidential Appendix D2 of the PEIR. This appendix is available to qualified viewers at the City of Carlsbad, 1635 Faraday Avenue, Carlsbad, CA 92008. These resources are predominately prehistoric archaeological sites of varying sizes and occupancy duration, and exhibit prehistoric material culture through midden and scatters of lithic and groundstone t ools. In addition, some of the identified sites in Tables 4.4-3 to 4.4-5 are considered historical resources pursuant to CEQA because they retain the potential to yield data important to prehistory or history (Criterion 4 of the California Register of Historic Resources). The PEIR concluded that the Master Plan improvements could result in a potentially significant impact to archaeological resources in the absence of mitigation.

With the incorporation of Mitigation Measure Cul-1, this impact would be reduced to a level of less than significant.

S
ince the certification of the PEIR, the city adopted the Carlsbad Tribal, Cultural, and Paleontological Resources Guidelines (2017), which updated and replaced the city’s 1990 Cultural Resource Guidelines.

The 2017 guidelines are incorporated by reference into the city’s MMRP to reflect the city’s established standards of performance for cultural resources investigations following the city’s General Plan Update (2015) and the adoption of Assembly Bill 52 in 2014. The adopted Addendum makes reference to these documents.

For
the proposed CIP projects which are located within geologic formations identified as high and moderate sensitivity in Table 1 of the 2017 Guidelines, a project-level paleontological resources investigation shall be conducted by a qualified professional paleontologist in cooperation with the County of San Diego and the San Diego Natural History Museum. CIP Project No. 5548 is located in a low risk area.

C
apital Improvement Program Project No. 5548
I
n this instant, the change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand from 740 lineal feet to approximately 2,600 lineal feet, all of which represents modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

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Conclusion
P
ursuant to CEQA Guidelines Sections 15162 and 15168, the request to construct the proposed Project is within the scope of the previously certified PEIR and Addendum, and there would be no additional impacts to biological resources beyond those analyzed in the PEIR and Addendum. Portions of MMRP from the PEIR and Addendum related to biological resources are required to be implemented for the Project (Cul-1A).

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

6. Energy Resources
– Would the Project:
a) Result in potentially significant
environmental impact due to wasteful,
inefficient, or unnecessary consumpti
on
of
energy resources, during project
construction or operation?
b) Conflict with or obstruct a state or local
plan for renewable energy or energy
efficiency?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to energy.

Section 4.5, Energy, of the PEIR provided an assessment of the Master Plans effects on existing water, sanitary sewer, and recycled water facilities energy use. The PEIR and Addendum concluded that the Master Plans would not generate a substantial net increase in vehicle trips based on pre- existing maintenance activities. Pipeline projects, once constructed, would not require the use of electricity, emergency generators, or any other type of fuel -consuming operating equipment. Additionally, the proposed repairs and improvements to existing facilities would not result in an increase in energy demand at these facilities. Lift stations would result in the consumption of fuel associated with the operation of construction equipment, and the use of electricity to power the pump motor. The PEIR and Addendum includes standard BMPs, identified as project design features in the adopted MMRP to minimize energy consumption during construction:
• E
lectrical power will be supplied from commercial power supply wherever feasible, to avoid or minimize the use of engine-driven generators.
• Trucks and equipment will not idle for more than 15 minutes when not in service.

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Capital Improvement Program Project No. 5548
I
n this instant, the change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand from 740 lineal feet to approximately 2,600 lineal feet, all of which represents modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to energy ; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum . The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity
of
Impact

7. Geology and Soils Resources
– Would the Project:
a) Directly or indirectly cause potential substantial
adverse effects, including the risk of loss, injury, or death involving: i) Rupture of a known earthquake
fault, as delineated on the most recent Alquist-Priolo
E
arthquake Fault Zoning Map issued by the Stat e
G
eologist for the area or based on other substantial
evidence of a known fault? Refer to Division of Mines
and Geology Special Publication 42. ii) Stro ng
seismic ground shaking? iii) Seismic-related ground
failure, including liquefaction? iv) Landslides?
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b) Result in substantial soil erosion or the loss of
topsoil?
c) Be located on a geologic unit or soil that is
unstable, or that would become unstable as a result
of the project, and potentially result in on- or off-site l
andslide, lateral spreading, subsidence, liquefaction
or collapse?
d) Be located on expansive soil, as defined in Table
18-1-B of the Uniform Building Code (1994), creating
substantial risks to life or property?
e) Have soils incapable of adequately supporting the
use of septic tanks or alternative waste water
disposal systems where sewers are not available for
the disposal of waste water?
f) Directly or indirectly destroy a unique
paleontological resource or site or unique geologic
feature?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to geology.

The PEIR considered geologic hazards as it relates to the proposed Master Plan improvements and det
ermined that a less than significant impact would result as it relates to hazards from unstable geologic units or soils. CIP projects , including for CIP Project No. 5548, would be required to comply with city standards and standard engineering practices, which will include the preparation of a project -specific geotechnical investigation. Compliance with existing state and local regulations combined with the incorporation of any recommendations from the geotechnical investigation would minimize potential impact to less than significant.

The po t
ential impacts associated with soil erosion were analyzed in the PEIR (Section 4.6) and Addendum. The PEIR and Addendum determined that the Master Plans would result in a less than significant impact associated with soil erosion. CIP project construction activities would be regulated under the NPDES General Permit for Discharges of Storm Water Runoff Associated with Construction Activity (General Construction Permit, NPDES Order No. 2012 -0006-DWQ). In addition, the city would comply with applicable grading ordinance(s) and/or erosion control requirements . This which would minimize any hazards related to cut and fill slopes and related landslide hazards. These requirements combined with the completion of a project specific geotechnical investigation and incorporation of any project-specific recommendations would minimize any impacts to less than significant. • Recommendations may include, but would not be limited to the following typical measures:

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o Over-excavate unsuitable materials and replace them with engineered fill. o Remove loose, unconsolidated soils and replace with properly compacted fill soils, or apply other design stabilization features.
o For thicker deposits, implement an applicable compaction technique such as dynamic compaction or compaction piles.
o Perform in-situ densification of soils or other alterations to the ground characteristics. o For landslides, implement applicable techniques such as stabilization; remedial grading and removal of landslide debris; or avoidance.

The po
tential impacts associated with septic tanks or alternative wastewater disposal systems were analyzed in the PEIR (Section 4.6). Similar to the adopted Master Plans, alternative wastewater disposal systems and septic tanks are not a component of the Master Plan Updates and, therefore, no impact would result.

S
ection 4.4, Cultural and Paleontological Resources, of the PEIR provided an analysis of the potential impacts of the Master Plan improvements to paleontological resources. Excavation and construction activities associated with proposed CIP projects has the potential to disturb or destroy paleontological resources depending on their location within the context of geologic formations with moderate and high paleontological sensitivity. Figure 4 and Table 1 of the city’s adopted 2017 Guidelines identifies the moderate and high paleontological sensitive geologic formations within the city. The Point Loma formation, Santiago formation, and Bay Point formation, are identified as high paleontological sensitivity, and the Lusardi, Delmar, late to middle Pleistocene, late Holocene marine beach, and late Holocene paralic estuarine deposits are identified as moderate sensitivity. Implementation of Mitigation Measure Pal-1 would minimize potential impacts associated with the disturbance of paleontological resources .

However, CIP Project No. 5548 is located in a low risk area and this measure is not applicable to the Project.

C
apital Improvement Program Project No. 5548
I
n this instant, the change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand from 740 lineal feet to approximately 2,600 lineal feet, all of which represents modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

The m
odest changes associated with the Project carries the same anticipated construction mobilization needs,
traffic control planning, anticipated construction schedule, final completion date, and specific construction benchmark dates as what would otherwise be required with the former scope of CIP Project No. 5548 (740 lineal foot replacement project). Therefore, the Project (pipe replacement extent of approximately 2,600 lineal feet), would not result in a new significant impact or substantially increase the severity of a previously identified significant impact relative to the PEIR and Addendum. The city, acting as Lead Agency for the Project, is responsible for adopting and implementing the approved mitigation. Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans. There is no exception for CIP Project No. 5548.

Furt
her environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known March 25, 2025
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and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to geology; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum . The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change Relative
to Program
Equal or
Less
Severity of
Impact

8. Greenhouse Gas Emissions
Resources
– Would the Project:
a) Generate greenhouse gas
emissions, either directly or indirectly,
that may have a significant impact on
t
he environment?
b) Conflict with an applicable plan,
policy or regulation adopted for the
purpose of reducing the emissions of
greenhouse gases?
D
iscussion
Mast
er Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to greenhouse gas emissions resources.

The PE
IR quantified the GHG emissions that would result from construction and operation of all of the CIP Projects proposed in the Master Plans. Construction of the projects would result in temporary emissions of GHG from the operation of construction equipment and from worker and building supply vendor vehicles. Equipment that is associated with construction activity includes dozers, rollers, dewatering pumps, backhoes, loaders, delivery, and haul trucks. The 2012 Master Plans EIR determined that the worst-case construction scenario, where all projects would be constructed simultaneously and completed in seven months, would result in GHG emissions of 959 MT CO2e. The 2012 Master Plan included the construction of 50 separate projects. The 2019 Master Plan Updates includes the construction of 27 separate projects. Therefore, the GHG emissions of 959 MT CO2e included in the 2012 Master Plan is considered conservative for the construction of the 2019 Master Plan projects. Thus, the yearly contribution to GHG from the construction of the Master Plan Updates is estimated to be 32 MT of CO2e per year.

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The 2012 Master Plans EIR calculated the operational GHG emissions of 396 MT CO2e per year based on an increased electrical demand of 1.2 million kWh. This electrical demand was based on the projected water demand of 21.4 mgd (23,968 afy). Based on updates to the city’s growth (2018), the updated projected potable water demand at buildout is 18.5 mgd (20,720 afy). This revised demand would reduce the increased electrical demand to 1.0 million kWh. Using a carbon intensity factor of 630 pounds of CO2e/MWh, the operational GHG associated with the 2019 Master Plan Updates would be reduced to 257 MT CO2e per year.

The t
otal annual GHG emissions from construction and operation of the 2019 Master Plan Updates is estimated at 289 MT CO2e. For this reason, the impact would be less than significant.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to greenhouse gas emissions; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR.

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Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

9. Hazardous and Hazardous Materials
Resources
– Would the Project:
a) Create a significant hazard to the public or
the environment through the routine
t
ransport, use, or disposal of hazardous
materials?
b) Create a significant hazard to the public or
the environment through reasonably
foreseeable upset and accident conditions
involving the release of hazardous materials
into the environment?
c) Emit hazardous emissions or handle
hazardous or acutely hazardous materials,
substances, or waste within one-quarter mile
of
an existing or proposed school?
d) Be located on a site which is included on a
list of hazardous materials sites compiled
pur
suant to Government Code Section
65962.
5 and, as a result, would it create a
significant hazard to the public or the
env
ironment?
e) For a project located within an airport land
use plan or, where such a plan has not been
adopt
ed, within two miles of a public airport
or public use airport, would the project result
in a safety hazard or excessive noise for
peopl
e residing or working in the project
area?
f) Impair implementation of or physically
interfere with an adopted emergency
response plan or emergency evacuation
plan?
g) Expose people or structures to a
significant risk of loss, injury or death
i
nvolving wildland fires, including where
w
ildlands are adjacent to urbanized areas or
where residences are intermixed with
wildlands?
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Discussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to hazardous materials.

S
ection 4.8, Hazards and Hazardous Materials, of the PEIR and the Addendum provided an assessment of the Master Plans and potential for the routine use, transport, or disposal of hazardous materials. As provided, there are multiple federal, state, and local laws and regulations, such as Resource Conservation and Recovery Act, Title 22 of the California Code of Regulations, the Hazardous Waste Control Law, Hazardous Materials Transportation Act, and Hazardous Material Business Plans that are required by law. Therefore, impacts associated with the use, transport, and disposal of hazardous materials generated from construction and operational activities were determined to be less than significant.

S
ection 4.8, Hazards and Hazardous Materials, of the PEIR and the Addendum provided an assessment of the Master Plans and potential for the accidental release of documented and undocumented sources of hazardous materials. As provided in the PEIR, the city has committed to the BMPs listed in the MMRP for hazardous materials. This will include a site -specific hazardous materials record search for the locations and type of hazardous materials for each CIP project and, if required, a site assessment.

Conducting a hazardous materials database search and environmental site assessment prior to any ground-disturbing activities associated with the construction of CIP sites would identify hazardous materials that could be encountered during CIP construction activities. With these precautions, the impact was concluded to be less than significant.

S
ection 4.8, Hazards and Hazardous Materials, of the PEIR and the Addendum provided an assessment of the Master Plans and potential for the emission of hazardous materials within a quarter mile of a school.

As provided, the activities and CIP components would be operated in compliance with applicable regulations that would minimize foreseeable risks of an accident that could create a hazard to the public or environment. Therefore, implementation of the Master Plans would not result in hazardous emissions within one-quarter mile of an existing or proposed school and impacts would be less than significant.

S
ection 4.8 of the PEIR and the Addendum evaluated issues related to emergency response and evacuation. The PEIR noted that construction activities associated with the Master Plans, particularly excavation and trenching activities associated with pipeline extensions or other improvements that are within roadway right -of-ways, may result in temporary, construction related lane and road closures or detours. As provided in the PEIR, the city has committed to the preparing a traffic control plan for applicable CIP projects and coordinating with the cities of Oceanside, Vista, and San Marcos. With implementation of a traffic control plan, the Master Plans would result in less than significant impacts on emergency response or evacuation plans.

S
ection 4.8 of the PEIR included an analysis of wildfire hazards. As provided, the sewer, water, and recycled water service areas include mostly urbanized areas; however, portions of the city service areas are located in areas classified as Very High Fire Hazard Severity Zones; particularly in the eastern area of the Study Area (CalFire 2016).

The f
ollowing measures would be implemented into the construction and operation of CIP projects to minimize potential effects related to hazards and hazardous materials:

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• Fire safety information will be disseminated to construction crews during regular safety meetings. Fire management techniques will be applied during project construction as deemed necessary by the lead agency and depending on-site vegetation and vegetation of surrounding areas.
• A brush management plan will be incorporated during project construction by the city, CMWD, or a contractor, as necessary. Construction within areas of dense foliage during dry conditions will be avoided, when feasible.
• In cases where avoidance is not feasible, necessary brush fire prevention and management practices will be incorporated. Specifics of the brush management program will be determined as site plans for the project are finalized.
• A site-specific hazardous materials record search for the locations and type of hazardous materials for the site will be done and, if required, a site assessment will be conducted during final design of individual CIP project components.
• In order to ensure that the project does not cause a significant hazard to the public or the environment through release of or transport of hazardous materials during construction and operation, the city, CMWD, or a contractor, will implement the following project design features:
o Pipelines of the project components would be constructed with polyvinyl chloride pipe, or other material, which is highly resistant to rupture. o Pump stations included as part of the project, and stations that will service the proposed project will be designed or constructed with safety features, including an emergency generator on site in case of electrical failure, and sufficient sewage detainment capacity in the event of generator and/or pump mechanism failure to allow time for repair and/or emergency conveyance of the sewage. Portable emergency generators may be used for pump stations that cannot be equipped with an on-site generator. Should emergenc y
l
eaks or spills occur, the Sewer Prevention and Response Plan for both the city and the CMWD will be implemented.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known March 25, 2025
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and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to hazardous materials ; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity
of Impact

10. Hydrology and Water Quality
Resources
– Would the Project:
a) Violate any water quality standards or
waste discharge requirements or otherwise
s
ubstantially degrade surface or ground water
quality?
b) Substantially decrease groundwater
supplies or interfere substantially with
gr
oundwater recharge such that the project
may impede sustainable groundwater
management of the basin?
c) Substantially alter the existing drainage
pattern of the site or area, including through
t
he alteration of the course of a stream or river
or through the addition of impervious surfaces,
in a manner which would: i) result in a
substantial erosion or siltation on- or off-site; ii)
substantially increase the rate or amount of
surface runoff in a manner which would result
in flooding on- or offsite; iii) create or
contribute runoff water which would exc
eed
t
he capacity of existing or planned stormwater
drainage systems or provide substantial
additional sources of polluted runoff; or iv)
impede or redirect flood flows
?
d) In flood hazard, tsunami, or seiche zones,
risk release of pollutants due to project
inundation?
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e) Conflict with or obstruct implementation of a
water quality control plan or sustainable
gr
oundwater management plan?
f) Impair implementation of or physically
interfere with an adopted emergency response
plan or emergency evacuation plan?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to hydrology.

S
ection 4.9, Hydrology and Water Quality, of the PEIR and the Addendum provided an assessment of the potential impacts associated with the Master Plan improvements to result in a violation of water quality standards or waste discharge requirements. Multiple CIP projects include improvements that are located adjacent to and parallel c reeks, such as Buena Vista Creek. During construction, there is potential for sediment and other construction- related contaminants to enter adjacent waterways. The PEIR and the Addendum determined that the Master Plans would result in a less than significant water quality impact based on the pre-existing NPDES and local grading and erosion ordinance requirements.

The pot
ential impacts associated with depletion of groundwater supplies were analyzed in the PEIR (Section 4.9) and Addendum. Construction activities associated with the Master Plans may require temporary dewatering. The Rancho Carlsbad Groundwater Supply project (W -16) proposes well water supply facilities in Rancho Carlsbad in the Agua Hedionda subunit of the San Luis Rey Riv er basin.

Groundwater rights are based on the potential available yield of the basin. The CMWD would be required to limit groundwater extraction to within its entitlement for the San Luis Rey River groundwater basin.

Prior to implementing the W-16 project, studies on water quality and basin yield to prevent overdraft and well capacity would be conducted to determine if the impacts on the groundwater basin are potentially significant and if a separate project -level EIR would be required. The PEIR and Addendum determined that the Master Plans would result in a less than significant impact associated with depletion of groundwater supplies.

The pot
ential impacts associated with the CIP improvements to result in alteration of existing drainage patterns and flood hazards were analyzed in the PEIR (Section 4.9) and Addendum. Access road and drainage improvements would involve grading, re -surfacing, and/or vegetation trimming or removal activities, and could result in temporary changes to existing drainage patterns during construction. The PEIR and Addendum determined that the Master Plan improvements would result in less than significant impacts to existing drainage patterns and flood hazards.

A
s provided in (a), the CIP improvements covered under the Master Plan Updates would be subject to NPDES and local grading and erosion control requirements. As a result, the Master Plan Updates would not result in substantial erosion or siltation on or off-site.

The f
ollowing measures would be implemented into the construction and operation of CIP projects to minimize potential effects to hydrology and water quality:

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• A construction spill contingency plan will be prepared for new facilities in accordance with County Department of Environmental Health regulations and retained on site by the construction manager. If soil is contaminated by a spill, the soil will be properly removed and transported to a legal disposal site.
• If groundwater is encountered and dewatering is required, then the groundwater will be disposed of by pumping to the sanitary sewer system or discharging to the storm drain system according to the conditions of the appropriate discharge permit.
• The lead agencies will consider using pervious or semi-pervious surfaces where possible to reduce the increase in the velocity of peak flows.
• For all potential impacts to natural drainages (i.e., pre-development hydrology), BMPs on site will be used to fully mitigate for project -related contaminants in the surface flows prior to their discharge to streams.
• For all trenchless construction activities, the city or CMWD will implement the following methods recommended by the CDFG and USFWS to prevent water pollution:
o Implementation of techniques to reduce potential for hydrofracture and inadvertent returns that could pollute nearby water.
o Hydrofractures will be cleaned immediately after they occur. Necessary response equipment will be readily accessible and in good working order. o Hydrofracture reporting and cleanup information will be disseminated to construction crews during regular safety meetings. All field personnel will understand their responsibility for timely reporting of hydrofractures
Capital Improvement Program Project No. 5548
I
n this instant, the change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand from 740 lineal feet to approximately 2,600 lineal feet, all of which represents modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

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Conclusion
A
s discussed above, the Project would not result in any significant impacts to hydrology; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum . The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

11. Land Use and Planning
– Would the Project:
a) Physically divide an established
community?
b) Cause a significant environmental
impact due to a conflict with any land use
pl
an, policy, or regulation adopted for the
pur
pose of avoiding or mitigating an
environmental effect?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to land use.

S
ection 4.10, Land Use and Planning, of the PEIR and the Addendum provided an assessment of the Master Plan’s potential to result in the division of established communities. The PEIR and Addendum determined that the Master Plans, including the project, would not divide an established community.

A
s discussed in Section 4.10 of the PEIR and the Addendum the Master Plans’ CIPs are designed to provide Carlsbad with plans for the development of sewer, water, and recycled water utilities to meet the present and future needs of the projected growth and land uses within each service area. Implementation of the Master Plans would not induce any unplanned growth that would be inconsistent with the city’s General Plan, which was formally updated in 2015, or its Growth Management Plan.

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The modest changes associated with the Project carries the same anticipated construction mobilization needs, traffic control planning, anticipated construction schedule, final completion date, and specific construction benchmark dates as what would otherwise be required with the former scope of CIP Project No. 5548 (740 lineal foot replacement project). Therefore, the Project (pipe replacement extent of approximately 2,600 lineal feet), would not result in a new significant impact or substantially increase the severity of a previously identified significant impact relative to the PEIR and Addendum. The city, acting as Lead Agency for the Project, is responsible for adopting and implementing the approved mitigation.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to land use ; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum . The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change Relative
to Program
Equal or
Less
Severity of
Impact

12. Mineral Resources
– Would the Project:
a) Result in the loss of availability of a
known mineral resource that would be
of
value to the region and the residents
of the state?
b) Result in the loss of availability of a
locally-important mineral resource
recovery site delineated on a local
general plan, specific plan or other l
and
use plan?
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Discussion
M
aster Plan Updates
The PEI
R and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to mineral resources.

As provided in the PEIR and Addendum, impacts to mineral resources were determined to have no impact in that the improvements were driven by new growth and ongoing condition assessment of existing infrastructure.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to mineral resources; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR.

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Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

13. Noise
– Would the Project:
a) Generation of a substantial temporary or
permanent increase in ambient noise levels
in the vicinity of the project in excess of
standards established in the local general
plan or noise ordinance, or applicable
s
tandards of other agencies?
b) Generation of excessive ground borne
vibration or ground borne noise levels?
c) For a project located within the vicinity of a
private airstrip or an airport land use plan or,
where such a plan has not been adopted,
within two miles of a public airport or public
use airport, would the project expose peopl
e
r
esiding or working in the project area to
excessive noise levels?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to noise.

Section 4.11, Noise, of the PEIR and the Addendum provided an assessment of the potential impacts to noise sensitive land uses resulting from the construction and long- term operation of the Master Plan improvements. As noted in the PEIR, maintenance trips would be to facilities throughout the service areas and would not be concentrated on a specific roadway. Due to the minimal number and geographic distribution of vehicular trips associated with the maintenance of the CIP projects, transportation noise increases would be negligible. The city has committed to ensuring that operating equipment will be designed to comply with all applicable local, state, and federal regulations. Const ruction activities associated with CIP projects, including for Project No. 5548, would involve the use of heavy equipment during land clearing, trenching and extraction, demolition of structures, construction of access roads and structures, and installation of some equipment, such as pumps. The magnitude of the impact would depend on the type of construction activity, type of construction equipment, duration of the construction phase, distance between the noise source and receiver, and any intervening topography. As provided, sound levels of typical construction equipment range from 60 decibels to 90 decibels at 50 feet from the source (FHWA 2006). The PEIR included construction measures into the project design, identified as project design features in the MMRP, to minimize noise effects to surrounding neighborhoods. These measures are included in the city’s MMRP. As a result, the conclusion identified in the PEIR and Addendum remains accurate and applicable to the Master Plan Updates.

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S
ection 4.11, Noise, of the PEIR and the Addendum provides an assessment of the potential vibration impacts to sensitive land uses resulting from the construction and long-term operation of the Master Plan improvements. Vibration sources associated with implementation of the Master Plans would be generated primarily from project construction. Once installed, the CIP project facilities include passive uses (pipelines, reservoirs) and pump stations, lift stations, pressure regulating station, and treatment facilities that do not generate substantial levels of vibration. As provided in the PEIR and the Addendum, construction-related vibration would have the potential to impact nearby structures and vibration-sensitive equipment and operations. The level of vibration generated from construction activities would depend on multiple factors including soil type, distance, and the energy -generating capability of the construction equipment. The PEIR and Addendum included measures for construction to minimize vibration effects to surrounding neighborhoods.

The
following measures would be implemented into the construction and operation of CIP projects to minimize noise effect to surrounding neighborhoods:
• Heavy equipment will be repaired at sites as far as practical from nearby residences. • Construction equipment, including vehicles, generators and compressors, will be maintained in proper operating condition and will be equipped with manufacturers’ standard noise control devices or better (e.g., mufflers, acoustical lagging, and/or engine enclosures). • Construction work, including on-site equipment maintenance and repair, will be limited to the hours specified in the noise ordinance of the affected jurisdiction. • Electrical power will be supplied from commercial power supply, wherever feasible, in order to avoid or minimize the use of engine-driven generators.
• Staging areas for construction equipment will be located as far as practicable from residences. • Operating equipment will be designed to comply with all applicable local, state, and federal noise regulations.
• If lighted traffic control devices are to be located within 500 feet of residences, the devices will be powered by batteries, solar power, or similar sources, and not by an internal combustion engine.
• The city, CMWD or a construction contractor will provide advance notice, between two and four weeks prior to construction, by mail to all residents or property owners within 300 feet of the alignment. For projects that would require pile driving or blasting, noticing will be provided to all residents or property owners within 600 feet of the alignment. The announcement will state specifically where and when construction will occur in the area. If construction delays of more than 7 days occur, an additional notice will be made, either in person or by mail.

The city or CMWD will identify and provide a public liaison person before and during construction to respond to concerns of neighboring residents about noise and other construction disturbance. The city or CMWD will also establish a program for receiving questions or complaints during construction and develop procedures for responding to callers.

Procedures for reaching the public liaison officer via telephone or in person will be included in notices distributed to the public in accordance with the information above. • For any construction activities which include blasting, a qualified blasting consultant and geotechnical consultant will prepare all required blasting plans and monitor all blasting activities in conformance with the Standards of the California Department of Mines.

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The
modest changes associated with the Project carries the same anticipated construction mobilization needs, traffic control planning, anticipated construction schedule, final completion date, and specific construction benchmark dates as what would otherwise be required with the former scope of CIP Project No. 5548 (740 lineal foot replacement project). Therefore, the Project (pipe replacement extent of approximately 2,600 lineal feet), would not result in a new significant impact or substantially increase the severity of a previously identified significant impact relative to the PEIR and Addendum. The city, acting as Lead Agency for the Project, is responsible for adopting and implementing the approved mitigation.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reas onable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to noise; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum . The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

14. Population and Housing
– Would the Project:
a) Induce substantial unplanned population
growth in an area, either directly (for
example, by proposing new homes and
bus
inesses) or indirectly (for example,
through extension of roads or other
infrastructure)
?
b) Displace substantial numbers of existing
people or housing, necessitating the
c
onstruction of replacement housing
elsewhere?
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Discussion

Master Plan Updates

The analysis indicated there would not be any impact to population and housing.

The PEIR and Addendum included a discussion of population and housing. As provided in the PEIR and Addendum, the Master Plan Updates rely on recent population projections published in the Carlsbad Growth Management Plan and Growth Database, San Diego Association of Governments population projections, and the master plans from neighboring agencies. Therefore, the CIP projects would not generate additional population or cumulatively exceed official regional or local population projections.

Capital Improvement Program Project No. 5548

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Further environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion

As discussed above, the Project would not result in any significant impacts to population and housing; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR.

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Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity
of Impact

15. Public Services
– Would the Project:
a) Result in substantial adverse physical
impacts associated with the provision of new
or physically altered governmental facilities,
need for new or physically altered
governmental facilities, the construction of
which could cause significant environmental
impacts, in order to maintain acceptable
s
ervice ratios, response times or other
performance objectives for any of the public
services: Fire protection? Police protection?
Schools? Parks? Other public facilities?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to public services.

The PEIR and Addendum included a discussion of the potential impacts of the Master Plans to public services, including fire protection, police protection, educational resources, parks and recreational facilities, and libraries. As provided in the PEIR and Addendum, the proposed CIP projects do not contain any residential uses or any other land uses that would result in an increased demand for public services.

Additionally, the Master Plans would not exceed official regional or local population projections. Similar to the adopted Master Plans, the size, capacity, and location of all CIP facilities under the Master Plan Updates would be based on the population and land use analysis based on forecasted growth identified in the Carlsbad General Plan (2015), and systems would be sized appropriately to serve projected service populations. For these reasons, no impacts to public services would result.

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Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to public services; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum . The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

16. Recreation
– Would the Project:
a) Would the project increase the use of
existing neighborhood and regional parks
or other recreational facilities such that
substantial physical deterioration of t
he
f
acility would occur or be accelerated?
b) Does the project include recreational
facilities or require the construction or
expansion of recreational facilities whic
h
m
ight have an adverse physical effect on
the environment?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to recreational services.

The PEIR and Addendum included a discussion of the potential impacts of the Master Plans to public recreational facilities. As provided in the PEIR and Addendum, the proposed CIP projects do not contain any residential uses or any other land uses that would result in an increased demand for public services.

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Additionally, the Master Plans would not exceed official regional or local population projections. Similar to the adopted Master Plans, the size, capacity, and location of all CIP facilities under the Master Plan Updates would be based on the population and land use analysis based on forecasted growth identified in the Carlsbad General Plan (2015), and systems would be sized appropriately to serve projected service populations. For these reasons, no impacts to public services would result.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substant ial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to public recreational facilities; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

17. Transportation
– Would the Project:
a) Conflict with a program, plan,
ordinance or policy addressing the
circulation system, including transit,
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roadway, bicycle and pedestrian
facilities?
b) Conflict or be inconsistent with CEQA
Guidelines § 15064.3, subdivision (b)?
c) Substantially increase hazards due to
a geometric design feature (e.g., sharp
curves or dangerous intersections) or
incompatible uses (e.g., farm
equipment)?
d) Result in inadequate emergency
access?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to traffic.

S
ection 4.12, Transportation/Traffic, of the PEIR and the Addendum provides an analysis of the proposed improvements covered under the adopted Master Plans. As described in Section 4.12 and the Addendum, the construction of the Master Plan improvements would generate construction-related trips.

However, construction traffic would only affect a limited area of the city in which they were located for a short-time during construction of a particular CIP project. The PEIR determined that impacts related to temporary construction traffic would be less than significant with the incorporation of a traffic control plan during construction. Implementation of a traffic control plan is identified as a project design feature.

Lev
el of service (LOS) has historically been used as a standard measure of traffic service and was used in the preparation of the Program EIR. Pursuant to SB 743, as of July 1, 2020, lead agencies are required to evaluate transportation impacts of a project using a Vehicle Miles Traveled (VMT) metric as a part of the CEQA analysis, which focuses on balancing the needs of congestion management with statewide goals related to infill development, promotion of public health through increased active transportation facilitated by closer proximity to alternative travel modes and reduces greenhouse gas emissions. In December 2018, the OPR published the Technical Advisory on Evaluating Transportation Impacts in CEQA, which provides recommendations for evaluating a project’s transportation impact using a VMT metric, thresholds of significance, and mitigation measures. Pursuant to Government Code § 15064.3(b), lead agencies have discretion to select the most appropriate methodology for evaluating a project’s VMT impacts. The City of Carlsbad adopted VMT thresholds and has published guidelines, which were last amended on October 3, 2022. The VMT thresholds ar e typically applied to new land use development projects. However, the city may conduct project reviews using the LOS metric when determining consistency with a prior Program EIR.

The
Master Plan Updates do not include any new traffic generating uses that would increase vehicle trips beyond existing conditions.

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Section 4.8 of the PEIR and the Addendum evaluated issues related to emergency response and evacuation. The PEIR and Addendum noted that construction activities associated with the Master Plans, particularly excavation and trenching activities associated with pipeline extensions or other improvements that are within roadway right- of-ways, may result in temporary, construction related lane and road closures or detours. As provided in the PEIR, the city has committed to the preparing a traffic control plan for applicable CIP projects and coordinating with the cities of Oceanside, Vista, and San Marcos.

Implementation of a traffic control plan is identified as a project design feature in the MMRP. With implementation of a traffic control plan, the Master Plans would result in less than significant impacts on emergency response or evacuation plans.

D
ue to the low volume of traffic generated by Master Plan improvements (e.g., temporary construction- related trips, periodic inspections and maintenance), the improvements would not degrade the traffic level of service in the Study Area or conflict with any applicable plans establishing measures of effectiveness for the performance of a circulation system.

C
apital Improvement Program Project No. 5548
I
n this instant, the change in design criteria, in combination with the increased current demand and the anticipated future needs, requires the pipe replacement project to expand from 740 lineal feet to approximately 2,600 lineal feet, all of which represents modest changes as the scope and extent of the replacement project is fully within the same street segment and fully within the same public right-of-way.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

I
ndividual development projects are required to be reviewed for compliance with emergency access standards set forth by the city’s public safety officials. The Project would not impede access to any nearby roadways that may serve as emergency access routes in the Project vicinity and would not result in insufficient emergency access. Road closure is not anticipated by the Project, although temporary encroachment may occur during construction activities. At least one lane of travel in each direction would be maintained during temporary construction activities. Any proposed road closure associated with construction activities would be coordinated with the Fire and Public Works Departments. Therefore, emergency vehicle access would be adequate and there would be no new or more severe impacts related to an adopted emergency response or emergency evacuation plan as a result of Project implementation.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

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Conclusion
A
s discussed above, the Project would not result in any significant impacts to traffic; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum . The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity
of Impact

18. Tribal Cultural Resources
– Would the Project cause a substantial
adverse change in the significance of a tribal
cultural resource, defined in Public Resources
Code § 21074 as either a site, feature, place,
cultural landscape that is geographically
defined in terms of the size and scope of t
he
l
andscape, sacred place, or object with
cultural value to a California Native American
t
ribe, and that is:
a) Listed or eligible for listing in the California
Register of Historical Resources, or in a local
r
egister of historical resources as defined in
P
ublic Resources Code § 5020.1(k), or
b) A resource determined by the lead agency,
in its discretion and supported by substantial
evidence, to be significant pursuant to criteri
a
s
et forth in subdivision (c) of Public Resources
Code Section 5024.1. In applying the criteria
set forth in subdivision (c) of Public Resources
Code Section 5024.1, the lead agency shall
consider the significance of the resource to
a
California Native American tribe?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The PEIR notes various, existing built-environment historical resources (buildings or structures aged 45 years old or older) and numerous archaeological sites within the Study Area. The PEIR included a cultural resources records search to evaluate the presence of known historical and archaeological resources for areas potentially impacted by the Master Plans. Several historical, built -environment resources are March 25, 2025
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known in the Study Area, including the Rancho de los Quiotes (Kiotes)/Leo Carrillo Ranch, which is a district listed in the National Register of Historic Places and California Register of Historic Resources.

This resource is located in the immediate vicini ty of segments related to proposed Sewer Master Plan CIP Project SR-22.

Sec
tion 4.4 of the PEIR and Addendum provides an assessment of potential impacts of the Master Plan improvements to known and undocumented archaeological resources. Known cultural resources that may be affected by the construction of proposed CIP project sites are listed by Master Plan improvements in Tables 4.4-3 to 4.4-5 of the PEIR. Additionally, the PEIR and Addendum notes a high archaeological resource sensitivity for the entire Study Area. A table that identifies which CIP projects would have the potential to impact each resource is available in Confidential Appendix D2 of the PEIR. This appendix is available to qualified viewers at the City of Carlsbad, 1635 Faraday Avenue, Carlsbad, CA 92008. These resources are predominately prehistoric archaeological sites of varying sizes and occupancy duration and exhibit prehistoric material culture through midden and scatters of lithic and groundstone tools. In addition, some of the identified sites in Tables 4.4-3 to 4.4-5 are considered historical resources pursuant to CEQA because they retain the potential to yield data important to prehistory or history (Criterion 4 of the California Register of Historic Resources). The PEIR concluded that the Master Plan improvements could result in a potentially significant impact to archaeological resources in the absence of mitigation.

With the incorporation of Mitigation Measure Cul-1, this impact would be reduced to a level of less than significant.

S
ections 15064.5(d) and (e) of the CEQA Guidelines assign special importance to human remains and specifies procedures to be used when Native American remains are discovered. As provided in Section

4.4 of the PEIR, these procedures are detailed under PRC, Section 5097.98. Any ground disturbing activities associated with implementation of the Master Plans, including grading, trenching, and excavation during construction of CIP projects, would have the potential to unintentionally disturb human remains, resulting in a significant impact. Implementation of the required protocol in accordance with PRC Section 5097.98 and California State Health and Safety Code Section 7050.5, to be followed upon unintentional disturbance of human remains, in conjunction with Standard Treatment Measures 5 and 11 from the city’s 2017 guidelines would ensure potential impacts on human remains remain less than significant.

The
modest changes associated with the Project carries the same anticipated construction mobilization needs, traffic control planning, anticipated construction schedule, final completion date, and specific construction benchmark dates as what would otherwise be required with the former scope of CIP Project No. 5548 (740 lineal foot replacement project). Therefore, the Project (pipe replacement extent of approximately 2,600 lineal feet), would not result in a new significant impact or substantially increase the severity of a previously identified significant impact relative to the PEIR and Addendum. The city, acting March 25, 2025
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as Lead Agency for the Project, is responsible for adopting and implementing the approved mitigation.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
P
ursuant to CEQA Guidelines Sections 15162 and 15168, the request to construct the proposed Project is within the scope of the previously certified PEIR and Addendum, and there would be no additional impacts to biological resources beyond those analyzed in the PEIR and Addendum. Portions of MMRP from the PEIR and Addendum related to biological resources are required to be implemented for the Project (Cul-1A).

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

19. Utilities and Service Systems
– Would the Project:
a) Require or result in the relocation or
construction of new or expanded water,
wastewater treatment or storm water
drainage, electric power, natural gas, or
telecommunications facilities, the construction
or
relocation of which could cause significant
environmental effects?
b) Have sufficient water supplies available to
serve the project and reasonably foreseeable
f
uture development during normal, dry and
m
ultiple dry years?
c) Result in a determination by the waste
water treatment provider, which serves or may
serve the project that it has adequate capacity
to serve the project’s projected demand in
addi
tion to the provider’s existing
c
ommitments?
d) Generate solid waste in excess of state or
local standards, on in excess of the capacity
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of local infrastructure, or otherwise impair the
attainment of solid waste reduction goals?
e) Comply with federal, state, and local
management and reduction statutes and
regulations related to solid waste?
Di
scussion
M
aster Plan Updates
The P
EIR and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to utilities and service systems.

The
PEIR and Addendum included a discussion of the potential impacts of the Master Plans on existing utilities and service systems. As provided in the PEIR, a primary purpose of the updating the Master Plans is to ensure adequate, effective, reliable, equitable and fiscally sound water, sewer, and recycled water service to current and projected future residential, commercial, and industrial customers.

No c
apacity increases would result under the Master Plan Updates that would otherwise require an increase in treatment capacity at the Encina Wastewater Treatment Control Facility.

Al
l demolition debris and construction waste associated with construction of CIP projects under the Master Plans would be properly handled and disposed of, in accordance with federal, state and local laws and regulations related to solid and hazardous waste.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in March 25, 2025
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the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

Conclusion
A
s discussed above, the Project would not result in any significant impacts to utilities and service systems; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum. The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

Significant
Project
Impact
Substantial
Increase in
Severity
Substantial
Change
Relative to
Program
Equal or
Less
Severity of
Impact

20. Wildfire
If located in or near state responsibility areas
or lands classified as very high fire hazard
s
everity zone – Would the Project:
a) Substantially impair an adopted
emergency response plan or emergency
evacuation pl
an?
b) Due to slope, prevailing winds, and other
factors, exacerbate wildfire risks, and
t
hereby expose project occupants to
pollutant concentrations from a wildfire or
the uncontrolled spread of a wildfire?
c) Require the installation or maintenance of
associated infrastructure (such as roads,
fuel breaks, emergency water sources,
power lines or other utilities) that may
exacerbate fire risk or that may result i
n
t
emporary or ongoing impacts to the
environment?
d) Expose people or structures to significant
risks, including downslope or downstream
flooding or landslides, as a result of runoff,
post-fire slope instability, or drainage
c
hanges?
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Discussion
M
aster Plan Updates
The PEI
R and Addendum indicate that CIP Project No. 5548 would replace approximately 740 feet of 12- inch diameter sewer pipe with 15- inch and 18 -inch diameter pipe for the Gravity Main SWM4793 and SWM6349 in Poinsettia Ln. near Poinsettia Elementary.

The anal
ysis indicated there would not be any impact to wildfire.

S
ection 4.8 of the PEIR and the Addendum included an analysis of wildfire hazards and impacts to emergency response. As provided, the sewer, water, and recycled water service areas include mostly urbanized; however, portions of the city service areas are located in areas classified as Very High Fire Hazard Severity Zones; particularly in the eastern area of the Study Area (CalFire 2016). The Master Plan Updates would generally be constructed in existing and future dedicated public rights of way and on city owned properties and do not include any new electrical connections in high fire hazard zones .

The CIP Projects would not exacerbate existing wildfire hazards that could otherwise result in downslope or downstream flooding or landslides, as a result of runoff, post -fire instability, or drainage changes.

Individual CIP projects would be required to comply with the city’s engineering standards along with Carlsbad’s grading requirements, which would minimize any hazards related to landslide hazards.

A
s provided in the PEIR and Addendum, the city has committed to preparing a traffic control plan for applicable CIP projects and coordinating with the cities of Oceanside, Vista, and San Marcos.

Implementation of a traffic control plan is identified as a project design feature in the MMRP.

Additionally numerous project design features and construction measures have been incorporated in an effort to reduce the potential for environmental effects. As noted in the 2019 Master Plan Update EIR Addendum, the CIP projects proposed would incorporate the applicable measures and project design features that are listed at the end of the MMRP into the final project’s design and construction plans.

There is no exception for CIP Project No. 5548.

Fur
ther environmental review is not required because there are no substantial changes proposed in the Project (as envisioned by the PEIR and Addendum) or circumstances that will require major revisions of the prior CEQA document due to the involvement of new significant effects or a substantial increase in the severity of previously identified significant effects. There is no new information, which was not known and could not have been known with the exercise of reasonable diligence at the time the prior environmental document was certified/adopted.

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Conclusion
A
s discussed above, the Project would not result in any significant impacts to wildfire; therefore, the Project would not result in an impact which was not adequately evaluated by the PEIR. Pursuant to CEQA Guidelines Sections 15162 and 15168, the current Project proposed is within the scope of the previously certified PEIR and Addendum . The Project would be required to implement applicable mitigation measures and project design features as identified in the PEIR and Addendum.

5. C
EQA Project Environmental Conditions of Approval
The P
roject would not result in any new or more severe impacts relative to what was identified the PEIR and Addendum. The Project is subject to environmental conditions of approval pursuant to mitigation identified and project design features in the PEIR as follows in this section.

The
environmental conditions of approval shall not relieve a person from the responsibility of complying with all other applicable regulations of any other local, state, or federal agencies. No part of what follows should be deemed or construed to repeal, amend, modify, alter, or change any other applicable ordinance or any part thereof; and that in all particulars wherein these conditions are not more restrictive, each such other ordinance shall continue and shall be in full force and effect.

Any existing reference to an ordinance, title, chapter, article, or section heading which is renumbered or relabeled since Program EIR certification and Addendum adoption must be construed to apply to the corresponding provisions contained within these conditions.

Mitigation Measures (Project Conditions of Approval)
Bi
o-1A Project-Level Biological Resource Surveys. During the design phase and prior to the construction of applicable CIP projects, the city and CMWD shall retain a qualified biologist to conduct project-level biological surveys. The surveys shall verify whether the project would occur on or in the immediate vicinity of natural habitat and habitat suitable for special status species. The surveys shall also identify if the project could result in direct or indirect impacts to natural habitat and special status species. The survey results shall be submitted to the city and CMWD to determine the need for further surveys and project -level analyses for subsequent CEQA documentation and the issuance of any discretionary actions or permits for the project.

Bi
o-1B HMP C overed Species Surveys and Habitat Mitigation. If it is demonstrated through the implementation of mitigation measure Bio- 1A that applicable CIP projects could directly or indirectly impact natural habitat that is suitable for special status species addressed within the City of Carlsbad HMP, the city and CMWD shall retain a qualified biologist to conduct focused, presence/absence surveys for rare plants and/or protocol- level surveys for special status wildlife species, as determined necessary for subsequent CEQA documentation and the issuance of any discretionary actions or permits for the project. Surveys shall follow protocols and guidelines approved by the USFWS, CDFG, and CNPS, and shall be conducted by qualified biologists permitted by the USFWS and/or CDFG, where applicable, and in accordance with the City of Carlsbad HMP and the City of Carlsbad Municipal Code.

The c
ity and CMWD shall adhere to the HMP permit and general conditions pertaining to HMP habitat and covered species. Impacts to HMP covered species shall be avoided and minimized to the maximum extent practicable in conformance with the City of Carlsbad HMP and the City March 25, 2025
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of Carlsbad Municipal Code. Impacts to natural habitat shall be mitigated in accordance with mitigation measure Bio-2A.

Bi
o-1C CIP Project 47 California Gnatcatcher Surveys and Habitat Mitigation. I f it is demonstrated through the implementation of mitigation measure Bio-1A that the CIP project could directly or indirectly impact the federally threatened coastal California gnatcatcher, the city and CMWD shall implement the following mitigation measures, at minimum, and in addition to any avoidance, minimization, and conservation measures prescribed by the USFWS during consultation and/or permitting:

1. W
ithin one year prior to CIP project construction, the city and CMWD shall retain a permitted biologist to commence focused surveys in accordance with USFWS protocols to determine the presence or absence of the coastal California gnatcatcher.

Documentation of the survey results will be provided to the city and CMWD, and USFWS, within 45 days of completing the final survey.

2. If the coastal California gnatcatcher could be directly or indirectly impacted then in compliance with FESA, and as stated in Section 2.6.1.1 of this EIR, the city and CMWD shall consult and obtain all applicable regulatory permits and authorizations from the USFWS, and the conditions of the regulatory permits and authorizations will be implemented accordingly and/or the CIP project would be modified to avoid direct “take” of the species and/or minimize adverse effects to the species and occupied habitat.

3. The city and CMWD shall mitigate the loss of habitat according to mitigation measure Bio- 2A.

Bi
o-1D Avoidance of N esting Birds and Raptors. To prevent direct impacts to nesting birds, including raptors, protected under the federal MBTA and CDFG Code, the city and CMWD shall enforce the following: Prior to removal or damage of any active nests or any tree pruning or removal operations during the prime nesting seasons, that being from March 15 to May 30, a certified biologist shall survey the trees to determine if there are any active nests within 500 feet of the area of tree removal or pruning. If any acti ve nests are located within 500 feet, no tree pruning or removal operations can occur until the nests are vacated or until the end of the prime breeding season, whichever occurs later. In addition, prior to any tree removal or pruning operations proposed outside of the prime nesting season but within the period of January 15 to September 15, a confirmation is required from a certified biologist that no disturbance to active nests or nesting activities would occur.

D
ocumentation from a certified biologist consistent with these requirements shall be submitted to the City Planner for review and approval. A note to this effect shall be placed on the construction plans
Bio-1E Pre-Construction Biological Resource Surveys. Prior to construction of CIP projects or portions of projects that will occur within disturbed or developed land, but will be sited immediately adjacent to an undeveloped open space area (i.e., an area supporting naturalized habitat, sensitive habitat, and/or habitat potentially suitable for special status species), the city and CMWD shall retain a qualified biologist to perform a pre-construction survey to verify existing biological resources adjacent to the project construction areas. The city and CMWD shall provide the biologist with a copy of the CIP project plans that clearly depict the construction work limits, including construction staging and storage areas, in order to determine which specific portion(s) of the project will require inspection of adjacent open space areas during the pre-construction March 25, 2025
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survey. At minimum, the biologist shall perform a visual inspection of the adjacent open space area in order to characterize the existing habitat types and determine the likelihood for special status species to occur, including the coastal California gnatcatcher, migratory songbirds, and other bird species with the potential to breed in the area. The pre- construction survey results shall be submitted to the city and CMWD prior to construction in order to verify the need for the additional construction measures proposed within Bio-1F through Bio-1I below Bi
o-1F Orange Construction Fencing. I f it is confirmed through the implementation of mitigation measure Bio-1E that the CIP project would occur immediately adjacent to sensitive habitat areas and/or habitat potentially suitable for special status species, the city and CMWD shall retain a qualified biologist to supervise the installation of temporary orange construction fencing, which clearly delineates the edge of the approved limits of grading and clearing, and the edges of environmentally sensitive areas that occur beyond the approved limits. This fencing shall be installed prior to construction, and maintained for the duration of construction activity. Fencing shall be installed in a manner that does not impact habitats to be avoided. If work occurs beyond the fenced or demarcated limits of impact, all work shall cease until the problem has been remedied and mitigation identified. Temporary orange fencing shall be removed upon completion of construction of the project. Implementation of this measure shall be verified by the city prior to and concurrent with construction.

Bi
o-1G Construction-R elated Noise. Construction noise created during the general breeding season (January 15 to September 15) that could affect the breeding of the coastal California gnatcatcher, migratory songbirds, and other bird species associated with adjacent undeveloped areas shall be avoided. No loud construction noise (exceeding 60 dBA hourly average, adjusted for ambient noise levels, at the nesting site) may take place within 500 feet of active nesting sites during the general breeding season (January 15 through September 15).

If
it is confirmed through the implementation of mitigation measure Bio- 1E that the CIP project could result in construction-related noise impacts to breeding birds during the general breeding season, the city and CMWD shall retain a qualified biologist to monitor the construction operations. The biological monitor shall be present to monitor construction activities that occur adjacent to the undeveloped open space area potentially supporting breeding birds. The monitor shall verify that construction noise levels do not exceed 60 dBA hourly average and shall have the ability to halt construction work, if necessary, and confer with the city, USFWS, and CDFG to ensure the proper implementation of additional protection measures during construction. The biologist shall report any violation to the USFWS and/or CDFG within 24 hours of its occurrence.

Bio-1H Construction Staging Areas . If it is confirmed through the implementation of mitigation measure Bio-1E that the CIP project would occur immediately adjacent to sensitive habitat areas and/or habitat potentially suitable for special status species, the city and CMWD shall design final CIP project construction staging areas such that no staging areas shall be located within sensitive habitat areas. The construction contractor shall receive approval by the City Planning & Engineering Divisions prior to mobilizations and staging of equipment outside of the project boundaries.

Bio-1I Contractor Training. If it is confirmed through the implementation of mitigation measure Bio-1E that the CIP project would occur immediately adjacent to sensitive habitat areas and/or habitat potentially suitable for special status species, the city and CMWD shall retain a qualified biologist to attend pre-construction meetings to inform construction crews of the sensitive resources and associated avoidance and/or minimization requirements.

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Bio-2A Habitat Compensation for Projects within the City of Carlsbad. If it is demonstrated through the implementation of mitigation measure Bio- 1A that applicable CIP projects could directly impact sensitive natural communities, including Habitat Groups A, B, C, D, E, and F specified in Table 11 and Section D.6 of the City of Carlsbad HMP, the city and CMWD shall implement the following:

1. Mitigation f or unavoidable impacts to Habitat Groups A, B, C, D, E, and F shall be provided according to the ratios specified below and consistent with Table 11 and Section D.6 of the City of Carlsbad HMP:

2. Im
pacts to Habitat Groups D, E, and F shall be mitigated at the Lake Calavera Mitigation Bank in accordance with Appendix B of the City of Carlsbad HMP for covered city projects that are eligible to mitigate impacts at the Lake Calavera Mitigation Bank.

3. I
mpacts to Habitat Groups A, B, and C shall be avoided to the maximum extent practicable through project-level siting during CIP project design and trenchless pipeline i
nstallation methods (e.g., jack and bore, horizontal directional drilling) during CIP project construction.

4. Unavoidable impacts to Habitat Groups A, B, and C shall be mitigated in-kind through implementation of any one or combination of the following measures, as approved and/or amended by the USFWS, USACE, RWQCB, and/or CDFG, if applicable:
a. On site as creation of new habitat within avoided and preserved areas at the CIP project site;
b. On site as restoration of existing habitat within temporary impact areas and/or avoided and preserved areas at the CIP project site;
c. On site as enhancement of existing habitat within avoided and preserved areas at the CIP project site;
d. Off site as purchase of habitat credits within an approved mitigation bank(s) (e.g., Carlsbad Oaks Conservation Bank, North County Habitat Bank); e. Off site as habitat preservation, creation, restoration, and/or enhancement within other properties or approved mitigation programs available at the time of grading; or f. A combination of the above.
g. In the coastal zone, impacts to Habitat Groups A, B, and C shall be mitigated in March 25, 2025
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accordance with the ratios described in Section D.7 of the HMP and shall include at a minimum a 1:1 creation (or substantial restoration when allowed) component to ensure no net loss of habitat. The remainder of the mitigation obligation may be satisfied pursuant to the provisions of the HMP. The proposed mitigation for impacts to Habitat Groups A, B, and C in the coastal zone is subject to review by the California Coastal Commission.

5. On- or of f-site creation, restoration, and/or enhancement mitigation for habitat groups A, B, and C shall consist of the following:
a. For
Habitat Group A types, including riparian and wetland sensitive natural communities (e.g., riparian forest, riparian woodland, riparian scrub, disturbed wetlands, coast live oak woodland), the city or CMWD shall prepare a Riparian/Wetland Habitat Restoration Plan detailing the specific riparian/wetland creation, restoration, and/or enhancement measures to be implemented as project mitigation. The Riparian/Wetland Habitat Restoration Plan shall be approved by the USFWS, USACE, RWQCB, and/or CDFG, as appropriate, prior to vegetation clearing, grading, and/or construction activities.
b. For Habitat Group B types, including upland sensitive natural communities (e.g., maritime succulent scrub, southern maritime chaparral, native grassland), the city or CMWD shall prepare an Upland Habitat Restoration Plan detailing the specific upland habitat creation, restoration, and/or enhancement measures to be implemented as project mitigation. The Upland Habitat Restoration Plan shall be approved by the USFWS and CDFG prior to vegetation clearing, grading, and/or construction activities.
c. For Habitat Group C types (occupied Coastal Sage Scrub), the city or CMWD shall prepare a Coastal Sage Scrub Habitat Restoration Plan detailing the specific coastal sage scrub habitat creation, restoration, and/or enhancement measures to be implemented as project mitigation. The Coastal Sage Scrub Habitat Restoration Plan shall be approved by the USFWS and CDFG prior to vegetation clearing, grading, and/or construction activities.
d. The restoration plans for Habitat Groups A, B, and C shall include a five- year maintenance and monitoring program with a requirement to meet city and Wildlife Agencies approved success criteria.

6. A
ny upland or riparian/wetland habitat impacts that occur beyond the approved work limits of any CIP project shall be mitigated at a higher ratio to be negotiated with the USFWS, USACE, RWQCB, and/or CDFG.

Cu
l-1 Cultural Resources Investigation. For the CIP projects proposed in close proximity to a known cultural resource or projects that would result in ground- disturbing activities in a previously undisturbed area, a project-level cultural resources investigation shall be conducted by a qualified cultural resource professional as defined in the Carlsbad Tribal, Cultural, and Paleontological Resources Guidelines (2017) . The cultural resources investigation shall include:

1. A CIP project site-specific review of the records search data at the South Coastal Information Center shall be conducted to determine if the CIP project site has been subjected to a professional survey.
a. If
a current cultural resources report addressing potential impacts on cultural resources is available, the city or CMWD shall implement the mitigation measures provi ded March 25, 2025
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within the report. In the event that a current and valid report is not available, or if the entirety of the CIP project site has not been professionally surveyed, then an updated records search shall be performed.
b. In accordance with the 2017 Guidelines, the city or CMWD shall contact the NAHC and l
ocal tribal governments for input on the project in order to identify any additional Native American resources that may not be included in the records search.

2. For t
hose CIP project site(s) not addressed by a current cultural resources report (produced within five years of project proposal), a project-level Phase I Cultural Resources Survey shall be prepared in accordance with the 2017 Guidelines. Updates for all resources encountered during the Phase I survey shall be recorded using Department o f
P
arks and Recreation (DPR) 523 forms in accordance with all applicable regulations.

Resources shall be evaluated for significance and eligibility for inclusion in all applicabl e hi
storic registers using methods such as, but not limited to, subsurface testing and/or archival research. Any subsurface testing would be monitored by an appropriate Nativ e A
merican representative.

3. In t
he event that such resources are found to be historical resources pursuant to CEQA, pot
ential adverse impacts must be analyzed as stated in PRC Sections 21084.1 and 21083.2(l). Suitable mitigation for significant effects on archaeological resources ar e out
lined in Section 15126.4(b)(3) as well as the 2017 Guidelines. The city or CMWD shall be responsible for implementing the methods for eliminating or substantially reducing impacts on resources as recommended by the archeologist and in consultation with th e
N
ative American Tribe. Such methods could include, but are not limited to:
a. Planning construction to avoid archaeological sites; b. Incorporation of sites within parks, greenspace, or other open space; c. Capping or covering a site with a layer of soil before building on the site; d. Deeding the site into a permanent conservation easement; e. Excavation (Data Recovery) of archaeological resources; and/or f. Construction monitoring by a qualified professional and appropriate Native American monitors as identified through consultation with the NAHC or Native American Tribe.

The monitor(s) shall be present at all pre- construction meetings.

If, as a result of Cul 1-3, it is determined that a CIP project site requires monitoring by a Native American Tribe, then the city or CMWD shall enter into a Pre -Excavation Agreement or Cultural Resource Treatment and Monitoring Agreement with the appropriate Native American Tribe prior to the commencement of earth disturbing activities and consistent with the 2017 Guidelines. The results of the cultural resources investigation shall be compiled into a technical report or memorandum and submitted to the city or CMWD and the South Coastal Information Center.

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Project Design Features (Project Conditions of Approval) A
esthetics
The f ol
lowing measures would be implemented into the design and construction of CIP projects to minimize potential effects on aesthetics to neighborhoods surrounding the CIP projects:
• Demolition debris will be removed in a timely manner for off-site disposal. • Tree and vegetation removal will be limited to those depicted on construction drawings. • Construction lighting will be shielded or directed away from adjacent residences. • All roadway features (signs, pavement delineation, roadway surfaces, etc.) and structures within state and private rights-of-way will be protected, maintained in a temporary condition, or restored.
• Disturbed areas will be restored following construction consistent with original site conditions and surrounding vegetation. If removed vegetation included invasive plant species, the restored ar
ea shall be revegetated with a mix of native, non-invasive plants that are compatible with the surrounding setting. If necessary, a temporary irrigation system will be installed and maintained by the city or CMWD, or watering trucks will be used at a frequency to be determined by the city or CMWD to maintain successful plant growth. For proposed CIP pipeline projects that would require trenching or that would require the temporary removal of concrete or asphalt, the disturbed area will be repaved to be consistent with the existing material. • Above-ground components such as pump stations will be designed with exterior fencing, paint, and vegetative screening to reduce aesthetic impacts in visually sensitive areas.

A
ir Quality
The
following BMPs would be implemented to minimize fugitive dust emissions and other criteria pollutant emissions during construction of CIP projects:
• Water or dust control agents will be applied to active grading areas, unpaved surfaces, and dirt stockpiles as necessary to prevent or suppress particulate matter from becoming airborne. All soil to be stockpiled over 30 days will be protected with a secure tarp or tackifiers to prevent windblown dust.
• Covering/tarping will occur on all vehicles hauling dirt or spoils on public roadways unless additional moisture is added to prevent material blow-off during transport. • Dirt and debris spilled onto paved surfaces at the project site and on the adjacent roadway will be swept or vacuumed and disposed of at the end of each workday to reduce resuspension of particulate matter caused by vehicle movement. During periods of soil export or import, when there are more than six trips per hour, dirt removal from paved surfaces will be done at least twice daily.
• Disturbed areas will be revegetated as soon as work in the area is complete. • Electrical power will be supplied from commercial power supply wherever feasible, to avoid or minimize the use of engine-driven generators.
• Air filters on construction equipment engines will be maintained in clean condition according to manufacturers’ specifications.
• The construction contractor will comply with an approved traffic control plan to reduce non- project traffic congestion impacts. Methods to reduce construction interference with existing traffic and the prevention of truck queuing around local sensitive receptors will be incorporated into this plan.
• Staging areas for construction equipment will be located as far as practicable from residences. • Trucks and equipment will not idle for more than 15 minutes when not in service.

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Biological Resources
The B
MPs identified in the City of Carlsbad HMP would be implemented during the construction and operation of CIP projects to minimize potential effects on biological resources:
• Use BMPs to prevent pollution generated by construction activities from entering surface and groundwater. BMPs will also ensure that non -stormwater discharges are not discharged into stormwater drainage systems. BMPs may include:
o Regulatory measures such as erosion control ordinances and floodplain restrictions. o Structural measures such as detention or retention basins, filters, weirs, check dams, or drainage diversions.
o Vegetative controls that reduce volume and accomplish pollutant removal by a combination of filtration, sedimentation, and biological uptake. o Maintenance of pump stations, sewer lines, and stormwater conveyance systems. o Cultural practices such as restrictions on pesticide and fertilizer applications, storage or disposal of toxic chemicals, or washing of vehicles or equipment in areas that can drain to the estuary.
o Public education programs that educate residences about proper disposal of oil or chemicals and that provide opportunities (e.g. designated locations) for residents to properly dispose of contaminants.
• For clearing, grading, and other construction activities within the watershed, ensure that proper irrigation and stormwater runoff mitigation measures are employed to reduce sediment loads and to prevent contamination from pesticide, fertilizers, petroleum products, and other toxic substances.
• Restrict or limit recreational or other activities within 500 feet of important forage, breeding, and roosting areas.
• Require attenuation measures for activities that generate noise levels greater than 60 dBA if occurring within 500 feet of important breeding habitat during the nesting season. • Restrict construction hours to daytime hours that do not require the use of construction lighting.

Tr
ibal, Cultural and Paleontological Resources
The
following procedure for unintentional disturbance of cultural resources will be implemented to minimize impacts to previously unknown archaeological resources during construction of CIP projects:

I
f subsurface cultural resources are encountered during CIP project construction, or if evidence of an archaeological site or other suspected cultural resources are encountered, all ground- disturbing activity will cease within 100 feet of the resource. A qualified cultural resource professional, as defined in the Carlsbad Tribal, Cultural, and Paleontological Resources Guidelines (2017) (2017 Guidelines), will be retained by the city or CMWD to assess the find, and to determine whether the resource requires further study. The assessment shall include consultation with the NAHC or Native American Tribe. Any previously undiscovered resources found during construction will be recorded on appropriate Department of Parks and Recreation (DPR) 523 forms and evaluated by a qualified cultural resource professional retained by the city or CMWD for significance under all applicable regulatory criteria. No further grading will occur in the area of the discovery until the city and CMWD approves the measures to protect the resources.

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Geology and Soils
The f
ollowing measures will be implemented into the construction and operation of CIP projects to minimize potential risks from geologic and soil hazards:
• A site-specific geotechnical investigation will be completed during the engineering and design of each CIP project that would require excavation in previously undisturbed soil, which would determine the risk to the project associated with fault rupture, groundshaking, liquefaction, landslides, and expansive soils. The geotechnical investigations will describe site- specific conditions and make recommendations that will be incorporated into the construction specifications for the CIP project. Recommendations may include, but would not be limited to the following typical measures:
o Over-excavate unsuitable materials and replace them with engineered fill. o Remove loose, unconsolidated soils and replace with properly compacted fill soils, or apply other design stabilization features.
o For thicker deposits, implement an applicable compaction technique such as dynamic compaction or compaction piles.
o Perform in-situ densification of soils or other alterations to the ground characteristics. o For landslides, implement applicable techniques such as stabilization; remedial grading and removal of landslide debris; or avoidance.

H
azards and Hazardous Materials
The f
ollowing measures would be implemented into the construction and operation of CIP projects to minimize potential effects related to hazards and hazardous materials:
• Fire safety information will be disseminated to construction crews during regular safety meetings. Fire management techniques will be applied during project construction as deemed necessary by the lead agency and depending on-site vegetation and vegetation of surrounding areas.
• A brush management plan will be incorporated during project construction by the city, CMWD, or a contractor, as necessary. Construction within areas of dense foliage during dry conditions will be avoided, when feasible.
• In cases where avoidance is not feasible, necessary brush fire prevention and management practices will be incorporated. Specifics of the brush management program will be determined as site plans for the project are finalized.
• A site-specific hazardous materials record search for the locations and type of hazardous materials for the site will be done and, if required, a site assessment will be conducted during final design of individual CIP project components.
• In order to ensure that the project does not cause a significant hazard to the public or the environment through release of or transport of hazardous materials during construction and operation, the city, CMWD, or a contractor, will implement the following project design features:
o Pipelines of the project components would be constructed with polyvinyl chloride pipe, or other material, which is highly resistant to rupture. o Pump stations included as part of the project, and stations that will service the proposed project will be designed or constructed with safety features, including an emergency generator on site in case of electrical failure, and sufficient sewage detainment capacity in the event of generator and/or pump mechanism failure to allow time for repair and/or emergency conveyance of the sewage. Portable emergency generators may be used for pump stations that cannot be equipped with an on-site generator. Should emergency leaks or spills occur, the Sewer Prevention and Response Plan for both the city and the CMWD will be implemented.

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H
ydrology and Water Quality
The f
ollowing measures would be implemented into the construction and operation of CIP projects to minimize potential effects to hydrology and water quality:
• A construction spill contingency plan will be prepared for new facilities in accordance with County Department of Environmental Health regulations and retained on site by the construction manager. If soil is contaminated by a spill, the soil will be properly removed and transported to a legal disposal site.
• If groundwater is encountered and dewatering is required, then the groundwater will be disposed of by pumping to the sanitary sewer system or discharging to the storm drain system according to the conditions of the appropriate discharge permit. • The lead agencies will consider using pervious or semi-pervious surfaces where possible to reduce the increase in the velocity of peak flows.
• For all potential impacts to natural drainages (i.e., pre-development hydrology), BMPs on site will be used to fully mitigate for project- related contaminants in the surface flows prior to their discharge to streams.
• For all trenchless construction activities, the city or CMWD will implement the following methods recommended by the CDFG and USFWS to prevent water pollution:
o Implementation of the following techniques to reduce potential for hydrofracture and inadvertent returns that could pollute nearby water:
 Sufficient earth cover will be used to increase resistance to hydrofracture.  An adequately dense drilling fluid will be used to avoid travel of drilling fluid in porous sands.
 The bore will be conducted in a manner that avoids collapse.  Borehole pressure will be maintained at levels low enough to avoid hydrofracture.  Reaming and pullback rates will be maintained at rates slow enough to avoid over- pressurization of the bore.
 The surface above the vicinity of the drill head will be visually monitored for surface evidence of hydrofracture.
 Drilling methods will be modified to suit site conditions such that hydrofracture does not occur.
o Hydrofractures will be cleaned immediately after they occur. Necessary response equipment will be readily accessible and in good working order. o Hydrofracture reporting and cleanup information will be disseminated to construction crews dur
ing regular safety meetings. All field personnel will understand their responsibility for timely reporting of hydrofractures.

No
ise
The
following measures would be implemented into the construction and operation of CIP projects to minimize noise effect to surrounding neighborhoods:
• Heavy equipment will be repaired at sites as far as practical from nearby residences. • Construction equipment, including vehicles, generators and compressors, will be maintained in proper operating condition and will be equipped with manufacturers’ standard noise control devices or better (e.g., mufflers, acoustical lagging, and/or engine enclosures). • Construction work, including on-site equipment maintenance and repair, will be limited to the hours specified in the noise ordinance of the affected jurisdiction. • Electrical power will be supplied from commercial power supply, wherever feasible, in order to avoid or minimize the use of engine-driven generators.

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• Staging areas for construction equipment will be located as far as practicable from residences. • Operating equipment will be designed to comply with all applicable local, state, and federal noise regulations.
• If lighted traffic control devices are to be located within 500 feet of residences, the devices will be powered by batteries, solar power, or similar sources, and not by an internal combustion engine.
• The city, CMWD or a construction contractor will provide advance notice, between two and four weeks prior to construction, by mail to all residents or property owners within 300 feet of the alignment. For projects that would require pile driving or blasting, noticing will be provided to all residents or property owners within 600 feet of the alignment. The announcement will state specifically where and when construction will occur in the area. If construction delays of more than 7 days occur, an additional notice will be made, either in person or by mail. • The city or CMWD will identify and provide a public liaison person before and during construction to respond to concerns of neighboring residents about noise and other construction disturbance. The city or CMWD will also establish a program for receiving questions or complaints during construction and develop procedures for responding to callers.

Tr
ansportation/Traffic
The
following measures would be implemented during construction of CIP projects to minimize traffic effects to surrounding neighborhoods:
• Prior to construction, the city or CMWD will prepare a traffic control plan and coordinate with the cities of Oceanside, Vista, and San Marcos to address traffic during construction of project components within the public rights -of-way of the affected jurisdiction(s), including bicycle, pedestrian, and transit facilities. The traffic control plan will include signage and flagmen when necessary to allow the heavy equipment to utilize residential streets. The traffic control plan will also include provisions for coordinating with local school hours and emergency service providers regarding construction times.

6. R
eferences
• 2012. City of Carlsbad Sewer Master Plan and Carlsbad Municipal Water District Water Master Plan and Recycled Water Master Plan Updates, Final Program Environmental Impact Report (EIR 12-01). State Clearinghouse No. 2012021006. October 2012, Certified by City of Carlsbad City Council on November 13, 2012. (Resolution No. 2012-245). • 2012. City of Carlsbad Sewer Master Plan, April 2012. (https://www.carlsbadca.gov/civicax/filebank/blobdload.aspx?BlobID=24496) • 2012. Carlsbad Municipal Water District Water Master Plan, November 2011. (https://www.carlsbadca.gov/civicax/filebank/blobdload.aspx?BlobID=24500) • 2012. Recycled Water Master Plan, January 2012.
(https://www.carlsbadca.gov/civicax/filebank/blobdload.aspx?BlobID=36069) March 25, 2025
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• 2015. Carlsbad General Plan Update and Program EIR.
(https://www.carlsbadca.gov/civicax/filebank/blobdload.aspx?BlobID=34558) • 2017. Tribal, Cultural, and Paleontological Resources Guidelines. (https://www.carlsbadca.gov/civicax/filebank/blobdload.aspx?BlobID=34010) • 2019. First Addendum to the Final EIR 12-01 for the City of Carlsbad Sewer Master Plan and Carlsbad Municipal Water District Water Master Plan and Recycled Water Master Plan Updates.

Adopted by City of Carlsbad City Council on Sept. 17, 2019 (Resolution No. 2019-183). • 2019. City of Carlsbad Sewer Master Plan, June 2019.
(https://www.carlsbadca.gov/home/showpublisheddocument/6099/637568466790970000) • 2019. Carlsbad Municipal Water District Water Master Plan, June 2019. (https://www.carlsbadca.gov/home/showpublisheddocument/6093/637568438821170000) • 2019. Recycled Water Master Plan, July 2019.
(https://www.carlsbadca.gov/home/showpublisheddocument/6097/637568466723600000) March 25, 2025
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STRELLA
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LOCATION MAP

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SEWER LINE CAPACITY

IMPROVEMENTS PROJECT

PROJECT SITE

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ALICANTE RD

EL FUERTE ST
CIP PROJECT NO.
5548 2

MICA RD

TITANITE PL

LAPIS RD

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LA GOLONDRINA ST

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KEENELAND DR

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LA PALOMA ST

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STATION
Exhibit 2
March 25, 2025
Item #5 Page 68 of 68
Docusign Envelope ID: 91F77BD7-30E8-4C0C-9D00-8F68D3FB1CCF Tammy Cloud-McMinn
From:

Sent:

To:

Sheila Cobian
Tuesday, March 25, 2025 5:10 PM
City Clerk
Subject: FW: Funding for Change in scope for sewer line capacity Attachments: 2023-03-07; Utilities Reserve Policy.pdf; 2023-03-07; City Council; ; Adopting a Utilities Reserve Policy.pdf
For Item #5
From: Amanda Flesse <[email protected]>
Sent: Tuesday, March 25, 2025 4:14 PM
To: Teresa Acosta <[email protected]>
All Receive - Agenda Item # 5..

For the Information of the:

CITY COUNCIL ,/.

Date~:JtJ:/s CA_ cc_,,,_
CM_ACM_DCM(3)_
Cc: Paz Gomez <[email protected]>; Geoff Patnoe <[email protected]>; Sheila Cobian <[email protected]>
Subject: Funding for Change in scope for sewer line capacity Council member Acosta,
I wanted to follow up on the funding needed for the Poinsettia Sewer project and where it may possibly come from :

Currently, we are anticipating the project construction of $4.2M .

Funding
• $990,381 in current replacement fund (FY25) to be rolled over to FY26 • $430,283 in capacity fund for SBA H
• $226,880 future SBA H fee
• $2,552,456 in current replacement CIP budget for FY26 For a total of $4.2M
We do anticipate this project being completely funded by the wastewater fund and no general funds is anticipated at this time .

I know Cindie already provided you with the reserve policy statement, but I included the SR as well so that everything is in one place.

Please let me know if you have any additional questions.

Thank you,
Amanda
City of
shad
Amanda L. Flesse. P.E.

Utilities Director/General Manager
City of Carlsbad/CMWD
Public Works - Utilities Department
5950 El Camino Real
Carlsbad CA 92008
www.carlsbadca .~
1 Policy No. 96
City Council Date Issued March 7, 2023
POLICY STATEMENT Resolution No. 2023-074
Subject: Utilities Reserve Policy
Purpose
The Utilities Reserve Policy is designed to establish guidelines to ensure the fiscal stability of the potable water, recycled water and wastewater funds and provide guidance to staff in the management of each utility's finances.1
Background
Properly designed utility reserve policies send a positive signal to ratepayers, investors and regulatory and credit rating agencies that the city and the Carlsbad Municipal Water District, or CMWD, are committed to maintaining long-lasting fiscal strength . Strong and transparent financial policies, including maintaining prudent reserves for emergencies, rate stability , working capital and capital improvement program, or CIP, projects, are consistent with best practices in the utility industry and are important to the city and the CMWD as it helps to:
• Maintain the short-term and long-term financial health of each system's utility • Maintain stable rates for customers and help ensure manageable rate increases • Fund unanticipated cost contingencies
• Ensure funds exist for system improvements
• Ensure cash exists for the timely payment of bills
• Act as a significant positive credit factor in bond and other credit ratings Reserve policies typically consist of multiple components set based on operational, capital and financial metrics . The sum of the component reserves should meet the overall reserve goal, typically between 180 and 365 days of operating costs. The appropriate target for days of cash on hand is unique to any utility and should reflect its specific finances, physical system and risks.

Based on the Standard and Poor's 2021 Sector Summary for Municipal Water and Wastewater Utilities, agencies with ratings of BBB+ and above held average cash on hand at a minimum of approximately 200 days.

Statement of policy
SECTION 1: MINIMUM AND TARGET RESERVES
Each utility should have sufficient unrestricted, undesignated reserves to maintain or improve its credit ratings, ensure that operating and maintenance costs will be paid in a timely manner, pay debt service obligations, and invest in needed capital improvements and equipment 1 The policy, as it applies to potable water and recycled water funds, was approved by the Board of Directors of Carlsbad Municipal Water District of the City of Carlsbad on March 7, 2023 by Resoluti~n No. 1700.

Utilities Reserve Policy
March 7, 2023

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replacement on a timely basis. In addition, each system utility should maintain sufficient reserves to minimize rate increases due to market volatility, weather impacts on demands, emergencies (such as natural disasters), and regulatory changes. The table below summarizes the desired reserve levels for each category
Table 1 Minimum and Target Reserves

PROPOSED MINIMUM AND TARGET RESERVE S
Reserve
metric
OpPr,Jting
(working
capital)
Days of
operating
costs
Debt service
Percent of
annual debt
service
Potable water and recycled water
Minimum 90 100%
Target 120 100%
Wastewater
Minimum 90 100%
120 100%
C1pita l
const rullion
'., year average
Percent of S-yec1r
rolling average of
annual spending
on capital
improvement
projects
50%
100%
25%
50%
SECTION 2: OPERATING (WORKING CAPITAL)
I merg Pncy
tapildl
Percent of
system
replacement
value

0.5%
1%

0.5%
1%
f{cl!P
~tabi li,atio n
fund
Percent of
rate
revenues
10%
20%
S%
10%
The operating or work ing capital reserve component provides a source of funds to manage normal monthly changes in revenues or expenses. It ensures sufficient resources to pay budgeted operating and maintenance expenses, including power supply costs, recognizing the timing differences between payment of expenditures and receipt of revenues. Minimum and target levels for the operat ing reserve component are set based on operating costs, specifically a number of days' worth of operating and maintenance expenses as described below .

Minimum Level
Potable Water and Recycled Water: Equal to 90 days of operating and maintenance expenses based on the most recent adopted budget.

Wastewater: Equal to 90 days of operating and maintenance expenses based on the most recent adopted budget.

Target Level
Potable Water and Recycled Water: Equal to 120 days of operating and maintenance expenses based on t he most recent adopted budget .

Wastewater: Equal to 120 days of operating and maintenance expenses based on the most recent adopted budget .

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Events or Conditions Prompting Use of the Operating Component The operating reserve component may be routinely used to cover temporary cash flow deficiencies caused by timing differences between receipt of revenues and incurring expense obligations and unexpected increases in operating expenses or decreases in revenues.

SECTION 3: DEBT SERVICE
The debt service reserve component ensures ability to make debt service payments in an extreme event that may impact the ability to provide services, thus impacting revenues at a time critical infrastructure repairs are needed to restore systems. The debt service reserve is intended to prevent an event in which the city and/or the CMWD would be unable to pay its debt service obligations during such emergencies, or extreme market disruptions. The minimum and target levels for the debt service reserve are set based on a percentage of the amount of debt service to be paid in a given fiscal year. Due to the strong negative implications of missed debt service payments, both the minimum and target levels are equal to 100% of the maximum annual debt service in the current fiscal year.

Minimum Level
Potable Water and Recycled Water: 1ooro of the maximum annual debt service payment in the current fiscal year.

Wastewater: 100% of the maximum annual debt service payment in the current fiscal year.

Target Level
Potable Water and Recycled Water: 100% of the maximum annual debt service payment in the current fiscal year.

Wastewater: 100% of the maximum annual debt service payment in the current fiscal year.

Events or Conditions Prompting Use of the Debt Service Component Th.e debt service reserve may be utilized in the event that one of the utilities is otherwise unable to pay its debt service obligations. It is not anticipated that the city and/or the CMWD would ever utilize these reserves absent a significant disaster or extreme market disruption .

SECTION 4: CAPITAL CONSTRUCTION
The capital construction reserve component provides funds to ensure continuity of construction over fiscal years as well as a source of funds to complete in-progress projects in the event that their intended funding source becomes unavailable during the course of construction. The capital construction reserve is set as a percentage of the forward-looking five year rolling average Utilities Department and CMWD CIP budget.

The capital construction minimum and target levels for wastewater are inclusive of the city's Encina Wastewater Authority (EWA) costs as EWA does not plan to hold reserves internally.

EWA provides wastewater treatment for the City of Carlsbad and operates the Carlsbad Water Recycling Facility. Due to the proportionally higher CIP costs for the wastewater fund (as compared to the potable water and recycled water funds), a lower percentage minimum and target values are used for wastewater. This helps to keep the overall reserve target in alignment with the Policy goals as well as to avoid undue pressure on wastewater rates.

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Minimum Level
Potable Water and Recycled Water: 50% of the projected five-year rolling average annual CMWD CIP expenditures for the potable water utility or recycled water utility.

Wastewater: 25% of the projected five-year rolling average annual Utilities Department CIP expenditures for the wastewater utility.

Target Level
Potable Water and Recycled Water: 100% of the projected five-year rolling average annual CMWD CIP expenditures for the potable water utility or recycled water utility.

Wastewater: 50% of the projected five-year rolling average annual Utilities Department CIP expenditures for the wastewater utility .

Events or Conditions Prompting Use of the Capital Construction Component The capital construction reserve component may be used to fund capital expenditures during the year as funding resources are acquired (e.g., bond proceeds, capital contributions, revenues, etc.) or to fund projects in the event that their intended funding source is no longer available.

SECTION 5: EMERGENCY CAPITAL
The emergency capital reserve component provides funds to ensure ability to repair the system after an emergency or natural disaster such as a flood or an earthquake. It is set based on a percentage of the estimated replacement value of each utility's system. The replacement values used for this analysis are determined by adjusting the original cost of each utility's assets (from the city and the CMWD's fixed asset records} to current fiscal year dollars using the regional Engineering News-Record Construction Cost Index.

Minimum Level
Potable Water and Recycled Water: Equivalent to 0.5% of the replacement value of depreciable capital assets for the potable and recycled water systems. Based on the 2019 Asset Management Plan, the replacement value of the potable water system is currently estimated at $1.5 billion, yielding a minimum reserve balance of $7.5 million, and the replacement value of the recycled water system is currently estimated at $346 million, yielding a minimum reserve balance of $1.7 million .

Wastewater: Equivalent to 0.5% of the replacement value of depreciable capital assets for the wastewater system. Based on the 2019 Asset Management Plan, the replacement value of the wastewater system is currently estimated at $780 million, yielding a minimum reserve balance of $3.9 million.

Utilities Reserve Policy
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Target Level
Potable Water and Recycled Water: Equivalent to 1% of the replacement value of depreciable capital assets for the potable and recycled water systems. Based on the 2019 Asset Management Plan, the replacement value of the potable water system is currently estimated at $1.5 billion, yielding a minimum reserve balance of $15.0 million, and the replacement value of the recycled water system is currently estimated at $346 million, yielding a target reserve balance of $3.5 million.

Wastewater: Equivalent to 1% of the replacement value of depreciable capital assets for the wastewater system. Based on the 2019 Asset Management Plan, the replacement value of the wastewater system is currently estimated at $780 million, yielding a target reserve balance of $7.8 million.

Events or Conditions Prompting Use of the Emergency Capital Component The emergency capital reserve component may be used in an emergency event requiring the need to fund necessary capital expenditures (e.g., natural disaster causing significant damage to the distribution or collections system).

SECTION 6: RATE STABILIZATION
The rate stabilization reserve component provides a source of funds to smooth rates or avoid rate increases in the event of short- or mid-term disruptions to revenues such as drought related demand reductions. The minimum and target levels are set based on a percentage of expected user rate revenues. The selected percentages reflect the revenue risk associated with potential decreases in water demands. The potential demand decreases assumed for each reserve level are informed by an analysis of customer usage data and the CMWD drought response plan.

Minimum Level
The percentage assumptions for the minimum levels are set to provide sufficient reserve funds to cover a demand reduction of approximately 15%, which is the average of the conservation targets for drought response levels 1 and 2 as described in the Drought Response Plan. Because a greater share of wastewater revenue is generated through fixed charges, they are less sensitive to changes in demands; therefore, the percentage for wastewater is lower than for potable water and recycled water.

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Potable Water and Recycled Water: Equal to 10% of budgeted rate revenues in each fiscal year.

Wastewater: Equal to 5% of budgeted rate revenues in each fiscal year.

Target Level
The percentage assumptions for the minimum levels are set to provide sufficient reserve funds to cover a demand reduction of approximately 30%, which is the average of the conservation targets for drought response levels 2 and 3 as described in the Drought Response Plan. That reduction would reflect usage roughly equivalent to the average usage in the three lowest demand months of the year. Because a greater share of wastewater revenues is generated through fixed charges, they are less sensitive to changes in demands; therefore, the percentage for wastewater is lower than for potable water and recycled water.

Potable Water and Recycled Water: Equal to 20% of budgeted rate revenues in each fiscal year.

Wastewater: Equal to 10% of budgeted rate revenues in each fiscal year.

Events or Conditions Prompting Use of the Reserve
The rate stabilization reserve component may be used to cover unexpected changes in operating revenues and changes in operating costs to reduce year-over -year volatility in needed rate increases.

Procedure
SECTION 1: USE AND REPLENISHMENT OF RESERVES
The city or the CMWD's potable water, recycled water and wastewater utilities will treat the minimum reserve levels as pract!cal reserve floors and allow reserves to increase or decrease as necessary within the minimum and target levels prescribed above.

To the extent that unrestricted, undesignated reserves are above the minimum level and below the target level, the utility has the flexibility to utilize those available funds to pay for capital projects (reducing the need for future debt), pay down unfunded liabilities such as pension obligations, decrease outstand ing debt or fund other strategic objectives . No other action would be required if reserves are between the minimum and target levels unless directed by the City Council or the CMWD Board.

If reserve funds exceed the target level, the utility would seek the City Council or the CMWD Board's approval to use the excess to finance capital improvements on a pay-as you-go basis, pay down existing debt, offset other long-term liabilities such as pension obligations, reduce rates or for other strategic purposes.

Reserve levels below the minimum targeted reserves would leave the city and/or the CMWD exposed to significant operational risks. Should a utility draw down reserves below the minimum levels, it will implement plans to return reserves to their minimum levels within a set timeframe. Such plans will be provided to the City Council and/or the CMWD Board for approval within 12 months of occurrence.

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SECTION 2: REPORTING AND OVERSIGHT
Reserve levels will be monitored during the fiscal year and reported in annual financial reports and/or presentations. Reserve minimum and target levels will be analyzed annually, and an over/under reserve determination shall be made in conjunction with year-end financial results.

These results will be reported to the City Council and the CMWD Board as part of the year-end financial report presentation. Should unrestricted designated or undesignated reserve levels need adjustment due to new risk factors or due to changes in the industry, these will be brought to the City Council and the CMWD Board as part of the year-end report .

The Policy will be reviewed annually and updated (at a minimum once every three years) if there are material changes in the risk exposures or new conditions that require changes in reserve levels.

Meeting Date:

To:

From:

Staff Contact:

Subject:

Districts:

March 7, 2023
Mayor/President and City Council/Board Members
Scott Chadwick, City Manager/Executive Manager
Vicki Quiram, Utilities Director
[email protected], 442-339-2722
Shoshana Aguilar, Senior Management Analyst
shoshana.aguilar@carlsbadca .gov, 760-814-0241
Adopting a Utilities Reserve Policy
All
Recommended Actions
CA Review CKM

1. Adopt a City Council resolution adopting a Utilities Reserve Policy for the wastewater enterprise fund

2. Adopt a Carlsbad Municipal Water District Board of Directors resolution adopting a Utilities Reserve Policy for potable water and recycled water enterprise funds Executive Summary
Staff have developed a Utilities Reserve Policy for the city's wastewater funds and the Carlsbad Municipal Water District's potable water and recycled water funds. Establishing these guidelines will ensure the stability of these essential funds and provide guidance to staff in managing each utility's finances.

The potable water, recycled water and wastewater funds currently follow the policy for reserves that the City Council has adopted for the General Fund, which targets a year-end fund balance of no less than 40% of operating costs. However, this is not an official policy for the separate potable water , recycled water or wastewater enterprise funds.

These three enterprise funds 1 rely solely on revenues generated by ratepayers provided wastewater services by the city and potable and recycled water by the Carlsbad Municipal Water District. These are essential functions, so continuity of service and financial viability must always be maintained . One component of meeting that obligation is the establishment of a robust reserve policy that will apply to each of these funds.

Under City Council Policy No. 1, the resolution adopting the proposed City Council policy requires four affirmative votes from the City Council members. The resolution approving the application of the proposed policy for CMWD utilities requires three affirmative votes of the CMWD Board members.
1 An enterprise fund is a separate financial reporting mechanism for which revenues and expenditures are segregated into a fund with financial statements separate from other governmental activities.

March 7, 2023 Item #11 Page 1 of 39
Explanation & Analysis
Background
Staff made a presentation to the City Council and the CMWD Board on the status of wastewater and water funds in September 2021. As part of that presentation, staff reported on plans to create reserve policies for stronger long-term management of the city Utilities Department and CMWD's enterprise funds. Carollo Engineers, the city and the district's utilities rates consultant, was engaged to assist with development of the policy.

Properly designed utility reserve policies send a positive signal to ratepayers, investors, and regulatory and credit rating agencies that the city and the CMWD are committed to maintaining long-lasting fiscal strength . Strong and transparent financial policies, includ ing maintaining prudent reserves for emergencies, rate stability, working capital and capital improvement program projects, are consistent with best practices in the utility industry and are important to the city and CMWD.

Such policies help to:
• Maintain the short -term and long-term financial health of each system's uti lity • Maintain stable rates for customers and help ensure manageable rate increases • Fund unanticipated cost contingencies
• Ensure funds exist for system improvements
• Ensure cash exists for the timely payment of bills
• Act as a significant positive credit factor in bond and other credit ratings Reserve policies typically consist of multiple components based on five financial metrics:
• Operating/working capital
• Debt service
• Capital construction (five-year average)
• Emergency capital
• Rate stabilization fund
The sum of the component reserves should meet the overall reserve goal, typically between 180 and 365 days of operating costs. The appropriate target for days of cash on hand is unique to any utility, and should reflect its specific finances, physical system and risks.

Based on Standard and Poor's 2021 Sector Summary for Municipal Water and Wastewater Utilities, agencies with ratings of BBB+ and above held an average cash on hand at a minimum of approximately 200 days. As a point of comparison, the city's current practice of maintaining 40% of operating costs is equivalent to 146 days of operating costs.

The proposed policy recommends minimum and target levels for the unrestricted, undesignated reserves and discusses t heir use and replenishment. The reserve study details the long-term financial outlook through fiscal year 2034-35, as shown in Exhibit 3.

For wastewater, a lower percentage of the capital construction five-year average was used so that the reserve targets for wastewater are not over-inflated. This helps to keep the overall reserve target in alignment with the policy goals as well as to avoid undue pressure on wastewater rates. Because a greater share of wastewate r revenue is generated through fixed charges, it is less sensitive to changes in demand and therefore the percentage for wastewater rate stabilization is lower than for potable water and recycled water.

March 7, 2023 Item #11 Page 2 of 39
Potable and recycled water
As shown in the potable water and recycled water graphs below, models show reserves will be above the targeted maximum through FY 2026-27 for potable water and through FY 2030-31 for recycled water. If the proposed policy is adopted, the following tables show that through those years, we will be spending down reserves to offset the percent of rate increases in future years.

After the initial use of existing reserve funds that exceed what is required by the policy, and depending on inflation and the cost increases of water from the who lesaler, rates would be set to assure that the total reserves would remain within the 180 days to 365 days range for the overall reserve goal.

The information presented for potable and recycled water below includes projected rate increases in future years between 2% and 6%. Following each new cost of service st udy, which is performed approximately every three years, staff will recommend rate increases for the next two or three years that reflect the updated projected cost to provide services to CMWD customers and keep the reserve within the targeted limits of the reserve policy. The next cost of service study update is expected to be completed in fall 2023. 1000 of'
900
800
700
600
500
400
300
200
100
0 ~V'
~"I,
l~
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,..,,si, ......

March 7, 2023
Potable water - Days of cash on hand
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r# t? 0,lcf r::,-¥ ::,"' /::>~ i> i> "I,~'\, r::,'V i> "I,& i> <t-i> .i."' ,::~ ,.,.... .. .... ...... .,_--; <t- .,_--; ,.,.... ~ '< '< '<
- Modeled days cash - - - Target days cash goal - - Minimum days cash goal Item #11 Page 3 of 39
Recycled water - Days of cash on hand
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- Modeled days cash - - - Target days cash goal - - Minim1.111 days cash goal Wastewater
As staff reported to the City Council in 2021, the city's wastewater enterprise fund was expected to see reserves drop below the minimum level desired due to the large amount of critically needed wastewater infrastructure improvements. On Jan. 11, 2022, the City Council approved rate increases of approximately 20% for each of three years in order to prevent a low fund balance from occurring in fiscal years 2021-22, 2022-23 and 2023-24. The wastewater graph below assumes proposed rate increases in future years between 1% and 4%. However, with each new cost of service study, which is performed approximately every three years, staff will recommend rate increases that reflect the projected cost to provide services to wastewater customers and keep the reserve within the targeted limits.

The City Council will then have an opportunity to adjust rates to prevent reserves from dropping lower than the minimum target. The next proposed cost of service study is expected in fall 2023. Increases proposed will cover fiscal years 2024-25 and 2025-26, and the recommendation may be to increase rates over the 1% to 4% assumption shown in the graph in order to more quickly reach the minimum reserve in this fund. If the projections do not change and rate increases are kept between 1% and 4%, reserves may continue to decrease before beginning to rebound in FY 2028-29.

March 7, 2023 Item #11 Page 4 of 39
Wastewater- Days of cash on hand
800
700
600
500
400
300
-------1 365davsl----------------------
~<;)
v""
200
100
0 - Modeled days cash - - - Target dayscash goal - - Minimum days cash goal Procedures detailed in policy
The policy also includes procedures for the use and replenishment of reserves, reporting and oversight. The following paragraphs summarize procedures in the proposed policy:
• To the extent that unrestricted, undesignated reserves are above the minimum and below the target, the utility would seek the City Council or the CMWD Board's approval to utilize those available funds to pay for capital projects, pay down unfunded liabilities, such as pension obligations, decrease outstanding debt or fund other strategic objectives . No other action would be required if reserves are between the minimum and maximum levels unless directed by the City Council or the CMWD Board. • Reserve levels below the minimum would leave the city or CMWD exposed to significant operational risks. Should a utility draw down reserves below the minimum level, it will implement plans to return reserves to the minimum level within a set timeframe. Such plans will be provided to the City Council or the CMWD Board for approval within 12 months of occurrence . As addressed above, the City Council will have an opportunity during the next rate study to decrease the anticipated exposure by adjusting rates. • Reserve levels will be monitored during the fiscal year and reported in annual financial reports and/or presentations . Reserve minimum and target levels will be analyzed annually, and an over/under reserve determination shall be made in conjunction with year-end financial results. These results will be reported to the City Council and the CMWD Board as part of the year-end financial report presentation. Should unrestricted designated or undesignated reserve levels need adjustment due to new risk factors or due to changes in the industry, these will be brought to the City Council and the CMWD Board as part of the year-end report.

March 7, 2023 Item #11 Page 5 of 39
Fiscal Analysis
There is no immediate fiscal impact from approving this policy .

The Water , Sewer and Recycled Water Reserve Study dated January 2023, which is provided as Exhibit 3, projects what the reserve will be based on actual expenditures through FY 2021-22 and the FY 2022-23 budget.

The potable water , recycled water and wastewater financial models will be updated to account for the policy targets, if they are adopted . A combination of the reserve requirements and the anticipated revenue based on approved rates will be used to inform operational and capital budgeting for FY 2023-24 and FY 2024-25. Staff will present the City Council with possible new rates to support the policy in our report on the next rate study.

Options
Staff provide the following options for consideration by the City Council and the CMWD Board:

1. Adopt resolutions establishing the proposed Utilities Reserve Policy for potable water, recycled water and wastewater enterprise funds
Pros:
• Ensures the fiscal stability of the potable water, recycled water and wastewater funds and guides staff in the management of each utility's finances • Maintains stable rates for customers and helps ensure manageable rate increases
• Ensures funds exist for system improvements
• Ensures cash exists for timely payment of bills
• Acts as a significant positive credit factor in bond and other credit ratings Cons:
• None identified

2. Do not adopt resolutions establishing the Utilities Reserve Policy for potable water, recycled water and wastewater enterprise funds
Pros:
• The City Council and the CMWD Board could request staff return with different reserve levels than those proposed
Cons:
• Delays adoption of a Utilities Reserve Policy, which could result in additional consultant expenses
Staff recommend Option 1 for the City Council's and the CMWD Board's approval.

Next Steps
Once adopted , the policy will be implemented by staff. It will be used to inform future updates to the cost-of-service studies.

Environmental Evaluation
This action does not require environmental review because it does not constitute a project within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change or a reasonably foreseeable indirect physical change in the environment.

March 7, 2023 Item #11 Page 6 of 39
Exhibits

1. City Council resolution

2. Carlsbad Municipal Water District Board of Directors resolution

3. Water, Sewer and Recycled Water Reserve Study dated January 2023 March 7, 2023 Item #11 Page 7 of 39
RESOLUTION NO. 2023-0 7 4

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,

CALIFORNIA, ADOPTING A UTILITIES RESERVE POLICY FOR THE

WASTEWATER ENTERPRISE FUND
Exhibit 1
WHEREAS, the City Council of the City of Carlsbad, California believes financial policies are central to a strategic, long-term approach to financial management; and WHEREAS, the City Council desires to establish a Utilities Reserve Policy for the wastewater enterprise fund to further support the city's other financial management policies; and WHEREAS, the Policy, as it applies to potable water and recycled water enterprise funds, was approved by the Board of Directors of the Carlsbad Municipal Water District of the City of Carlsbad on March 7, 2023 by Resolution No. 1700; and
WHEREAS, the Utilities Reserve Policy will inform the future cost-of-service studies, rate setting, and budgetary decisions for the wastewater enterprise fund.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows:

1. That the above recitations are true and correct.

2. That the City Council adopts the Utilities Reserve Policy provided in Attachment A.

PASSED, APPROVED AND ADOPTED at a Joint Meeting of the City Council of the City of Carlsbad and the Board of Directors of the Carlsbad Municipal Water District of the City of Carlsbad on the 7th day of March. 2023, by the following vote, to wit :

AYES:

NAYS:

ABSTAIN:

ABSENT:

March 7, 2023
Blackburn, Bhat-Patel, Acosta, Burkholder, Luna.

Non e .

None.

KEITH BLACKBURN, Mayor
SHERRY FREISINGER, City Clerk
(SEAL)
Item #11 Page 8 of 39
Attachmen t A
Policy No. 96
City Council Date Issued March 7, 2023
POLICY STATEMENT Resolution No. 2023-074
Subject: Utilities Reserve Policy
Purpose
The Utilities Reserve Policy is designed to establish guidelines to ensure the fiscal stability of the potable water, recycled water and wastewater funds and provide guidance to staff in the management of each utility's finances.1
Background
Properly designed utility reserve policies send a positive signal to ratepayers, investors and regulatory and credit rating agencies that the city and the Carlsbad Munic ipal Water District, or CMWD, are committed to maintaining long-lasting fiscal strength. Strong and transparent financial policies, including maintaining prudent reserves for emergencies, rate stability, work ing capital and capital improvement program, or CIP, projects, are consistent with best practices in the utility industry and are important to the city and the CMWD as it helps to :
• Ma intain the short-term and long-term financial health of each system's utility • Ma intain stable rates for customers and help ensure manageable rate increases • Fund unanticipated cost contingencies
• Ensure funds exist for system improvements
• Ensure cash exists for the timely payment of bills
• Act as a significant positive credit factor in bond and other credit ratings Reserve policies typ ically consist of multiple components set based on operational, capital and financial metrics. The sum of the component reserves should meet the overall reserve goal, typically between 180 and 365 days of operating costs. The appropriate target for days of cash on hand is unique to any utility and should reflect its specific finances, physical system and risks.

Based on the Standard and Poor's 2021 Sector Summary for Municipal Water and Wastewater Utilities , agencies with ratings of BBB+ and above held average cash on hand at a minimum of approximately 200 days.

Statement of policy
SECTION 1: MINIMUM AND TARGET RESERVES
Each utili ty should have sufficient unrestricted, undesignated reserves to maintain or improve its credit ratings, ensure that operating and maintenance costs will be paid in a timely manner, pay debt service obligations, and invest in needed capital improvements and equipment 1 The pol icy, as it applies to potable water and recycled water fund s, was approv ed by th~ Board of Directo rs of Carlsbad Mun icipal Wat er District of the City of Carlsbad on March 7, 2023 by Resolutio n No. 1700.

March 7, 2023 Item #11 Page 9 of 39
Utilities Reserve Policy
March 7, 2023

Page 2 ends

replacement on a timely basis. In addition, each system utility should maintain sufficient reserves to minimize rate increases due to market volatility, weather impacts on demands, emergencies (such as natural disasters), and regulatory changes. The table below summar izes the desired reserve levels for each category
Table 1 Minimum and Target Reserves

PROPOSED MINIMUM AND TARGET RESERVES
Reserve
metric
Op1°r,1ting
(working
r;iriital)
Days of
operating
costs
Delli serv ice
Percent of
annual debt
service
Potable water and recycled water
Minimum 90 100%
Target 120 100%
Wastewater
Minimum 90 100%
Target 120 100%
Capital
co11-,1 ruction
':, year average
Percent of 5-year
rolling average of
annual spending
on capital
improvement
projects
50%
100%
25%
50%
SECTION 2: OPERATING (WORKING CAPITAL)
t mer 1'.t'llCY
C Jpit.JI
Percent of
system
replacement
value

0.5%
1%

0.5%
1%
KatP
stJbilildtlOfl
funri
Percent of
rate
revenues
10%
20%
5%
10%
The operating or work ing capital reserve component provides a source of funds to manage normal monthly changes in revenues or expenses. It ensures sufficient resources to pay budgeted operating and maintenance expenses, including power supply costs, recognizing the timing differences between payment of expenditures and receipt of revenues. Minimum and target levels for the operating reserve component are set based on operating costs, specifically a number of days' worth of operat ing and maintenance expenses as described below.

Minimum level
Potable Water and Recycled Water: Equal to 90 days of operating and maintenance expenses based on the most recent adopted budget.

Wastewater: Equal to 90 days of operating and maintenance expenses based on the most recent adopted budget.

Target Level
Potable Water and Recycled Water: Equal to 120 days of operating and maintenance expenses based on the most recent adopted budget.

Wastewater: Equal to 120 days of operating and maintenance expenses based on the most recent adopted budget.

March 7, 2023 Item #11 Page 10 of 39
Utilities Reserve Policy
March 7, 2023

Page 3 ends

Minimum Level
Potable Water and Recycled Water: 1009:c, of the maximum annual debt service payment in the current fiscal year.

Wastewater: 100% of the maximum annual debt service payment in the current fiscal year.

Target Level
Potable Water and Recycled Water: 100% of the maximum annual debt service payment in the current fiscal year.

Wastewater: 100% of the maximum annual debt service payment in the current fiscal year.

Events or Conditions Prompting Use of the Debt Service Component The debt service reserve may be utilized in the event that one of the utilities is otherwise unable to pay its debt service obligations . It is not anticipated that the city and/or the CMWD would ever utilize these reserves absent a significant disaster or extreme market disruption.

The capital construction minimum and target levels for wastewater are inclusive of the city's Encina Wastewater Authority (EWA) costs as EWA does not plan to hold reserves internally .

March 7, 2023 Item #11 Page 11 of 39
Utilities Reserve Policy
March 7, 2023

Page 4 ends

Minimum Level
Potable Water and Recycled Water: 50% of the projected five-year rolling average annual CMWD CIP expenditures for the potable water utility or recycled water utility.

Wastewater: 25% of the projected five-year rolling average annual Utilities Department CIP expenditures for the wastewater utility .

Target Level
Potable Water and Recycled Water: 100% of the projected five-year rolling average annual CMWD CIP expenditures for the potable water utility or recycled water utility.

Wastewater: 50% of the projected five-year rolling average annual Utilities Department CIP expenditures for the wastewater utility.

SECTION 5: EMERGENCY CAPITAL
The emergency capital reserve component provides funds to ensure ability to repair the system after an emergency or natural disaster such as a flood or an earthquake. It is set based on a percentage of the estimated replacement value of each utility's system. The replacement values used for this analysis are determined by adjusting the original cost of each utility's assets (from the city and the CMWD's fixed asset records) to current fiscal year dollars using the regional Engineering News-Record Construction Cost Index.

March 7, 2023 Item #11 Page 12 of 39
Utilities Reserve Policy
March 7, 2023

Page 5 ends

SECTION 6: RATE STABILIZATION
The rate stabilization reserve component provides a source of funds to smooth rates or avoid rate increases in the event of short- or mid-term disruptions to revenues such as drought related demand reductions . The minimum and target levels are set based on a percentage of expected user rate revenues. The selected percentages reflect the revenue risk associated with potential decreases in water demands. The potential demand decreases assumed for each reserve level are informed by an analysis of customer usage data and the CMWD drought response plan.

March 7, 2023 Item #11 Page 13 of 39
Utilities Reserve Policy
March 7, 2023

Page 6 ends

Potable Water and Recycled Water: Equal to 10% of budgeted rate revenues in each fiscal year.

Wastewater: Equal to 5% of budgeted rate revenues in each fiscal year.

Potable Water and Recycled Water: Equal to 20% of budgeted rate revenues in each fiscal year.

Wastewater: Equal to 10% of budgeted rate revenues in each fiscal year.

Procedure
SECTION 1: USE AND REPLENISHMENT OF RESERVES
The city or the CMWD's potable water, recycled water and wastewater utilities will treat the minimum reserve levels as practical reserve floors and allow reserves to increase or decrease as necessary within the minimum and target levels prescribed above.

To the extent that unrestricted, undesignated reserves are above the minimum level and below the target level, the utility has the flexibility to utilize those available funds to pay for capital projects (reducing the need for future debt), pay down unfunded liabilities such as pension obligations, decrease outstand ing debt or fund other strategic objectives. No other action would be required if reserves are between the minimum and target levels unless directed by the City Council or the CMWD Board.

Reserve levels below the minimum targeted reserves would leave the city and/or the CMWD exposed to significant operational risks. Should a utility draw down reserves below the minimum levels, it will implement plans to ret urn reserves to their minimum levels within a set timeframe. Such plans will be provided to the City Council and/or the CMWD Board for approval within 12 months of occurrence.

March 7, 2023 Item #11 Page 14 of 39
Utilities Reserve Policy
March 7, 2023

Page 7 ends

The Policy will be reviewed annually and updated (at a minimum once every three years) if there are material changes in the risk exposures or new conditions that require changes in reserve levels.

March 7, 2023 Item #11 Page 15 of 39
RESOLUTION NO. 1700

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD

MUNICIPAL WATER DISTRICT OF THE CITY OF CARLSBAD, CALIFORNIA,

ADOPTING A UTILITIES RESERVE POLICY FOR POTABLE WATER AND

RECYCLED WATER ENTERPRISE FUNDS
Exhibit 2
WHEREAS, the Carlsbad Municipal Water District, or CMWD, Board believes financial policies are central to a strategic, long-term approach to financial management; and WHEREAS, the CMWD Board desires to establish a Utilities Reserve Policy for potable water and recycled water enterprise funds to further support the District's other financial management policies; and
WHEREAS, the Policy, as it applies to the wastewater enterprise fund, was approved by the City Council of the City of Carlsbad on March 7, 2033 by Resolution No. 2023-076; and WHEREAS, the Utilities Reserve Policy will inform the future cost-of-service studies, rate setting and budgetary decisions for the potable water and recycled water enterprise funds.

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Municipal Water District of the City of Carlsbad, California, as follows:
l. That the above recitations are true and correct .

2. That the CMWD Board adopts the Utilities Reserve Policy provided in Attachment A.

PASSED, APPROVED AND ADOPTED at a Joint Meeting of the Carlsbad Municipal Water District Board of Directors of the City of Carlsbad and the City Council of the City of Carlsbad on the 7th day of March, 2023, by the following vote, to wit:

AYES:

NAYS:

ABSTAIN:

ABSENT:

March 7, 2023
Blackburn, Bhat-Patel, Acosta, Burkholder, Luna.

None.

KEITH BLACKBURN, President
~
J ~ ~HERRY EREISINGEB, Secretary
f7 1/(SEAL)
Item #11 Page 16 of 39
Attachment A
Policy No. 96
City Council Date Issued March 7, 2023
POLICY STATEMENT Resolution No. 2023-074
Subject: Utilities Reserve Policy
Purpose
The Utilit ies Reserve Policy is designed to establish guidelines to ensure the fiscal stability of the potable water, recycled water and wastewater funds and provide guidance to staff in the management of each utility's finances.1
Background
Properly designed utility reserve policies send a positive signal to ratepayers, investors and regulatory and credit rating agencies that the city and the Carlsbad Municipal Water District, or CMWD, are committed to maintaining long-lasting fiscal strength. Strong and transparent financial policies, including maintaining prudent reserves for emergencies, rate stability, working capital and capital improvement program, or CIP, projects, are consistent with best practices in the utility industry and are important to the city and the CMWD as it helps to:
• Maintain the short-term and long-term financial health of each system's utility • Maintain stable rates for customers and help ensure manageable rate increases • Fund unanticipated cost contingencies
• Ensure funds exist for system improvements
• Ensure cash exists for the timely payment of bills
• Act as a significant positive credit factor in bond and other credit ratings Reserve policies typica lly consist of multiple components set based on operational, capital and financial metrics. The sum of the component reserves should meet the overall reserve goal, typically between 180 and 365 days of operating costs. The appropriate target for days of cash on hand is unique to any utility and should reflect its specific finances, physical system and risks.

Statement of policy
SECTION 1: MINIMUM AND TARGET RESERVES
Each utility should have sufficient unrestricted, undesignated reserves to maintain or improve its credit ratings, ensure that operat ing and maintenance costs will be paid in a timely manner, pay debt service obligat ions, and invest in needed capital improvements and equipment 1 The policy, as it applies to potable water and recycled water funds, was approved by the Board of Directors of Carlsbad Municipal Water District of t he City of Carlsbad on March 7, 2023 by Resolution No. 1700.

March 7, 2023 Item #11 Page 17 of 39
------------------------------------------
Utilities Reserve Policy
March 7, 2023

Page 2 ends

replacement on a timely basis. In addition, each system utility should maintain sufficient reserves to minimize rate increases due to market volatility , weather impacts on demands, emergencies (such as natural disasters), and regulatory changes. The table below summarizes the desired reserve levels for each category
Table 1 Minimum and Target Reserves

PROPOSED MINIMUM AND TARGET RESERVES
Reserve
metric
Op1°r.1ting
(working
r.1nit,,I)
Days of
operating
costs
Oebt serv ice
Percent of
annual debt
service
Potable water and recycled water
Minimum 90 100%
Target 120 100%
Wastewater
Minimum 90 100%
Target 120 100%
Capital
cor1s1 ruction
':, year average
Percent of 5-year
rolling average of
annual spending
on capital
improvement
projects
50%
100%
25%
50%
SECTION 2: OPERATING !WORKING CAPITAL)
lmercenry
capital
Percent of
system
replacement
value

0.5%
1%

0.5%
1%
Katf'
stabil1Lation
fund
Percent of
rate
revenues
10%
20%
5%
10%
The operating or work ing capital reserve component provides a source of funds to manage normal month ly changes in revenues or expenses. It ensures sufficient resources to pay budgeted operating and maintenance expenses, including power supply costs, recognizing the timing differences between payment of expenditures and receipt of revenues. Minimum and target levels for the operating reserve component are set based on operating costs, specifically a number of days' worth of operating and maintenance expenses as described below.

Minimum Level
Potable Water and Recycled Water: Equal to 90 days of operating and maintenance expenses based on the most recent adopted budget.

Wastewater: Equal to 90 days of operating and maintenance expenses based on the most recent adopted budget.

Target Level
Potable Water and Recycled Water: Equal to 120 days of operating and maintenance expenses based on the most recent adopted budget.

Wastewater: Equal to 120 days of operating and maintenance expenses based on the most recent adopted budget .

March 7, 2023 Item #11 Page 18 of 39
Utilities Reserve Policy
March 7, 2023

Page 3 ends

SECTION 3: DEBT SERVICE
The debt service reserve component ensures ability to make debt service payments in an extreme event that may impact the ability to provide services, thus impacting revenues at a time critical infrastructure repairs are needed to restore systems. The debt service reserve is intended to prevent an event in which the city and/or the CMWD would be unable to pay its debt service obligations during such emergencies, or extreme market disruptions . The minimum and target levels for the debt service reserve are set based on a percentage of the amount of debt service to be paid in a given fiscal year. Due to the strong negative implications of missed debt service payments, both the minimum and target levels are equal to 100% of the maximum annual debt service in the current fiscal year.

Minimum Level
Potable Water and Recycled Water: 10oro of the maximum annual debt service payment in the current fiscal year.

Wastewater: 100% of the maximum annual debt service payment in the current fiscal year.

Target Level
Potable Water and Recycled Water: 100% of the maximum annual debt service payment in the current fiscal year.

Wastewater: 100% of the maximum annual debt service payment in the current fiscal year.

SECTION 4: CAPITAL CONSTRUCTION
The capital construct ion reserve component provides funds to ensure continu ity of construct ion over fiscal years as well as a source of funds to complete in-progress projects in the event that their intended fund ing source becomes unavailable during the course of construction . The capital construction reserve is set as a percentage of the forward -looking five year rolling average Utilities Department and CMWD CIP budget.

The capital construction minimum and target levels for wastewater are inclusive of the city's Encina Wastewater Authority (EWA) costs as EWA does not plan to hold reserves internally .

EWA provides wastewater treatment for the City of Carlsbad and operates the Carlsbad Water Recycling Facility. Due to the proport ionally higher CIP costs for the wastewater fund (as compared to the potable water and recycled water funds), a lower percentage minimum and target values are used for wastewater. This helps to keep the overall reserve target in alignment with the Policy goals as well as to avoid undue pressure on wastewater rates.

March 7, 2023 Item #11 Page 19 of 39
Utilities Reserve Policy
March 7, 2023

Page 4 ends

Minimum Level
Potable Water and Recycled Water: 50% of the projected five-year rolling average annual CMWD CIP expenditures for the potable water utility or recycled water utility.

Wastewater: 25% of the projected five-year rolling average annual Utilities Department CIP expenditures for the wastewater utility.

Target Level
Potable Water and Recycled Water: 100% of the projected five-year rolling average annual CMWD CIP expenditures for the potable water utility or recycled water utility.

Wastewater: 50% of the projected five-year rolling average annual Utilities Department CIP expenditures for the wastewater utility.

SECTION 5: EMERGENCY CAPITAL
The emergency capital reserve component provides funds to ensure ability to repair the system after an emergency or natural disaster such as a flood or an earthquake . It is set based on a percentage of the estimated replacement value of each utility's system. The replacement values used for this analysis are determined by adjusting the original cost of each utility's assets (from the city and the CMWD's fixed asset records) to current fiscal year dollars using the regional Engineering News-Record Construction Cost Index.

March 7, 2023 Item #11 Page 20 of 39
Utilities Reserve Policy
March 7, 2023
Pages
Target Level
Potable Water and Recycled Water: Equivalent to 1% of the replacement value of depreciable capital assets for the potable and recycled water systems. Based on the 2019 Asset Management Plan, the replacement value of the potable water system is currently estimated at $1.5 billion, yielding a minimum reserve balance of $15.0 million, and the replacement value of the recycled water system is currently estimated at $346 million, yielding a target reserve balance of $3.5 million.

SECTION 6: RATE STABILIZATION
The rate stabilization reserve component provides a source of funds to smooth rates or avoid rate increases in the event of short- or mid-term disruptions to revenues such as drought related demand reduct ions. The minimum and target levels are set based on a percentage of expected user rate revenues. The selected percentages reflect the revenue risk associated with potential decreases in water demands. The potential demand decreases assumed for each reserve level are informed by an analysis of customer usage data and the CMWD drought response plan.

March 7, 2023 Item #11 Page 21 of 39
Utilities Reserve Policy
March 7, 2023

Page 6 ends

Potable Water and Recycled Water: Equal to 10% of budgeted rate revenues in each fiscal year.

Wastewater: Equal to 5% of budgeted rate reven_ues in each fiscal year.

Potable Water and Recycled Water: Equal to 20% of budgeted rate revenues in each fiscal year.

Wastewater: Equal to 10% of budgeted rate revenues in each fiscal year.

Procedure
SECTION 1: USE AND REPLENISHMENT OF RESERVES
The city or the CMWD's potable water, recycled water and wastewater utilities will treat the minimum reserve levels as practical reserve floors and allow reserves to increase or decrease as necessary within the minimum and target levels prescribed above.

To the extent that unrestricted, undesignated reserves are above the minimum level and below the target level, the utility has the flexibility to utilize those available funds to pay for capital projects (reducing the need for future debt), pay down unfunded liabilities such as pension obligations, decrease outstanding debt or fund other strategic objectives . No other action would be required if reserves are between the minimum and target levels unless directed by the City Council or the CMWD Board.

March 7, 2023 Item #11 Page 22 of 39
Utilities Reserve Policy
March 7, 2023

Page 7 ends

The Policy will be reviewed annually and updated (at a minimum once every three years) if there are material changes in the risk exposures or new conditions that require changes in reserve levels.

March 7, 2023 Item #11 Page 23 of 39
( City of
Carlsbad
and
Carlsbad Municipal Water District
Water, Sewer, and Recycled Water Reserve Study

DRAFT RESERVE POLICY
FINAL I January 2023
Exhibit 3
March 7, 2023 Item #11 Page 24 of 39

WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNICIPAL WATER DISTRICT Contents
Section 1- Introduction

1.1 Utility Reserve Policy Considerations
Section 2 - Proposed Unrestr icted, Undesignated Reserves

2.1 Summary Reserve Policy Recommendations

2.2 Operating (Working Capital)

2.3 Debt Service

2.4 Capital Construction

2.5 Emergency Capital

2.6 Rate Stabilization
Section 3 - Potent ial Reserve Procedures

3.1 Procedures for the Use and Replenishment of Reserves

3.2 Procedures for Reporting and Oversight
Section 4 - Projected Reserve Performance
Section 5 - Conclusion
Tables
Table 1
Table 2
Figures
Figure 1
Figure 2
Figure 3
Minimum and Target Reserves
Projected Rate Revenue Increases
Minimum and Target Levels for Total Reserves Projection - Potable Water Minimum and Target Levels for Total Reserves Projection - Recycled Water Minimum and Target Levels for Total Reserves Projection - Sewer 1 1
3 3
3 4
5 5
6 8
8 9
10 14
3 10
10 11
12 FINAL I JANUARY 2023 I i
Item #11 Page 25 of 39

WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNICIPAL WATER DISTRICT Section 1

INTRODUCTION
The City of Carlsbad (City) and the Carlsbad Municipal Water District (CMWD) provide potable water and recycled water service to approximately 28,900 connections and sewer service to approximately 26,600 accounts. Potable and recycled water services are managed by the CMWD while sewer services are provided through the City's Utilities Department. All services fall under the purview of the Public Works Branch of the City and ultimately the Carlsbad City Council and/or the CMWD Board of Directors.

The City Council suggests financial management policies for City funds including the utility funds. Currently, the potable water, recycled water, and sewer funds follow the policy that the City Council has adopted for the General Fund, which targets a year-end funds balance of no less than 40% of operating costs. However, this is not an official policy for the separate potable water, recycled water, or sewer funds.

As essential functions, continuity of service and financial viability must always be mainta ined for the City and the CMWD's utilit ies. One component of meeting this requirement is the establishment of a robust reserve policy . The Utility Cash Reserve Policy (Policy) described in this memorandum is designed to establish guidelines to ensure the fiscal stability of the potable, recycled water, and sewer funds and provide guidance to staff in the management of each utility's finances.

1.1 Utility Reserve Policy Considerations
Properly designed utility reserve policies send a positive signal to ratepayers, investors, and regulatory and credit rating agencies that the City and the CMWD are committed to maintaining long-lasting fiscal strength . Strong and transpa rent financial policies, including maintaining prudent reserves for emergencies, rate stability, working capital and capital improvements, are consistent with best practices in the utility industry and are important to the City and the CMWD as it helps to :
• Maintain the short -term and long-term financ ial health of each system's ut ility. • Mainta in stable rates for custome rs and help ensure manageable rate increases. • Fund unanticipated cost contingencies.
• Ensure funds exist for system improvements.
• Ensure cash exists for the timely payment of bills.
• Act as a significant positive credit factor in bond and other credit ratings .

Reserve policies typically consist of multiple components set based on operational, capital, and financial metrics . The sum of the component reserves should meet the overall reserve goal, typ ically between 180 and 365 days of operating costs. The appropriate target for days of cash on hand is unique to any utility and should reflect its specific finances, physical system, and risks. Based on the Standard and Poor's 2021 Sector Summary fo r Municipal Water and Wastewater Utilities, agencies with ratings of BBB+ and above held average cash on hand at a minimum of approximately 200 days. As a point of compar ison, the City's current practice of maintaining 40% of operating costs is equivalent to 146 days of operat ing costs.

FINAL I JANUARY 2023 I 1
Item #11 Page 26 of 39

WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNICIPAL WATER DISTRICT Utilities may implement multiple types of reserves, including restricted reserves, unrestricted designated reserves, and unrestricted undesignated reserves. Unrestr icted, undesignated reserves may be used for any lawful purpose and have not been designated for specific capital and operating purpose because rate-funded reserves are not restricted for specific uses other than the norma l restrictions on rate revenues. In contrast, for example, reserves funded with connection fees would be restricted for appropriate uses. This Policy recommends minimum and target levels for the unrestricted, undesignated reserves, discusses their use and replenishment, and details a long-term financial outlook from Fiscal Year Ending (FYE) 2022 through FYE 2035.

FINAL I J AN UARY 2023 I 2
Item #11 Page 27 of 39
WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARL58AD & CARLSBAD MUNIOPAL WATER DISTRICT Section 2

PROPOSED UNRESTRICTED, UNDESIGNATED

RESERVES
The proposed unrestricted, undesignated reserve policy outlines the minimum and target levels of the appropriate types of unrestricted, undesignated reserve components.

Under the proposed reserve policy, each utility would have sufficient unrestricted, undesignated reserves to maintain or improve its credit ratings, ensure that operating and maintenance costs will be paid in a timely manner, pay debt service obligations, and invest in needed capital improvements and equipment replacement on a timely basis. In addition, each system utility would maintain sufficient reserves to minimize rate increases due to market volatility, weather impacts on demands, emergencies (such as natural disasters), and regulatory changes.

2.1 Summary Reserve Policy Recommendations
Table 1 Minimum and Target Reserves
I
Operating I I Capital I I Rate (Wor_king Debt Service Construction E::r~::ty Stabilization Capital) 5-Yr Avg p Fund
Days of Percent of Percent of 5- Percent of
Year Rolling System Percent of Rate Reserve Metric Operatinq Annual Debt Average Replacement Revenues Costs Service Annual CIP Value Potable Water and Recycled Water
Minimum 90 Days 100% 50% 0.5% 10%
Target 120 Days 100% 100% 1% 20%
Sewer
Minimum 90 Days 100% 25% 0.5% 5%
Target 120Days 100% 50% 1% 10%

2.2 Operating (Working Capital)
The operating or working capital reserve component provides a source of funds to manage normal monthly changes in revenues or expenses. It ensures sufficient resources to pay budgeted operating and maintenance expenses, including power supply costs, recognizing the timing differences between payment of expenditures and receipt of revenues. Minimum and target levels for the operating reserve component are set based on operat ing costs, specifically a number of days' worth of operating and maintenance expenses as described below.

FINAL I JANUARY 2023 I 3
March 7, 2023 Item #11 Page 28 of 39

WATER, SEWER,AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNICIPAL WATER DISTRICT Mini mum Level
Water and Recycled Water: Equal to 90 days of operating and maintenance expenses based on the most recent adopted budget.

Sewer: Equal to 90 days of operating and maintenance expenses based on the most recent adopted budget.

Target Level
Water and Recycled Water: Equal to 120 days of operating and maintenance expenses based on the most recent adopted budget.

Sewer: Equal to 120 days of operating and maintenance expenses based on the most recent adopted budget.

2.3 Debt Service
The debt service reserve component ensures ability to make debt service payments in an extreme event that may impact the ability to provide services, thus impacting revenues at a time critical infrastructure repairs are needed to restore systems. The debt service reserve is intended to prevent an event in which the City and/or the CMWD would be unable to pay its debt service obligations during such emergencies, or extreme market disruptions. The minimum and target levels for the debt service reserve are set based on a percentage of the amount of debt service to be paid in a given fiscal year. Due to the strong negative implications of missed debt service payments, both the minimum and target levels are equal to 100% of the maximum annual debt service in the current fiscal year.

Minimum Level
Water and Recycled Water: 100% of the maximum annual debt service payment in the current fiscal year .

Sewer: 100% of the maximum annual debt service payment in the current fiscal year.

Target Level
Water and Recycled Water: 100% of the maximum annual debt service payment in the current fiscal year.

Sewer: 100% of the maximum annual debt service payment in the current fiscal year.

Events or Conditio ns Prompting Use of the Debt Service Component The debt service reserve may be utilized in the event that one of the utilities is otherwise unable to pay its debt service obligations. It is not anticipated that the City and/or the CMWD would ever utilize these reserves absent a significant disaster or extreme market disruption.

FINAL I JANUARY 2023 I 4
March 7, 2023 Item #11 Page 29 of 39

WATER, SEWER,AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNICIPAL WATER DISTRICT

2.4 Capital Construction
The capital construction reserve component provides funds to ensure continuity of construction over f iscal years as well as a source of funds to complete in-progress projects in the event that their intended funding source becomes unavailable during the course of construction. The capital construction reserve is set as a percentage of the forward-looking five -year rolling average Utilities Department and CMWD capital improvement program (CIP) budget.

The capital construction minimum and target levels for sewer are inclusive of the City's Encina Wastewater Authority (EWA) costs as EWA does not plan to hold reserves internally. EWA provides wastewater treatment for the City of Carlsbad and operates the Carlsbad Water Recycling Facility . Due to the proportionally higher CIP costs for the sewer fund (as compared to the potable wate r and recycled water funds), a lower percentage minimum and target values are used for sewer. This helps to keep the overall reserve target in alignment with the Policy goals as well as to avoid undue pressure on sewer rates.

Minimum Level
Water and Recycled Water: 50% of the projected five-year rolling average annual CMWD CIP expenditures for the potable water utility or recycled water utility.

Sewer: 25% of the projected five-year roll ing average annual Utilities Department CIP expenditures for the sewer utility .

Target Level
Water and Recycled Water: 100% of the projected five-year rolling average annual CMWD CIP expenditures for the potable water utility or recycled water utility.

Sewer: 50% of the projected five -year rolling average annual Utilities Department CIP expenditures for the sewer utility .

Events or Conditions Prompting Use of the Capital Constructio n Component The capital construction reserve component may be used to fund capital expenditures during the year as funding resources are acquired (e.g., bond proceeds, capital contributions, revenues, etc.) or to fund projects in the event that their intended funding source is no longer available.

2.5 Emergency Capital
The emergency capital reserve component provides funds to ensure ability to repair the system afte r an emergency or natural disaster such as a flood or an earthquake. It is set based on a percentage of the estimated replacement value of each utility's system . The replacement values used fo r this analysis were determined by adjusting the original cost of each utility 's assets (from the City and the CMWD's fixed asset records) to current (FY 2022) dollars using the regional Engineering News-Record Construction Cost Index.

While an annual evaluation of the system replacement value is not necessary for setting the minimum and target reserve levels, the replacement value should be adjusted annually (between evaluations) to account for cost inflat ion. The analysis completed for this memorandum applies a 3.5% annual escalation factor to the replacement value to match the construction cost inflation factor utilized in the City and the CMWD's most recent rate studies.

FINAL I JAN UARY 2023 I 5
Item #11 Page 30 of 39

WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNICIPAL WATER DISTRICT Minimum Level
Water and Recycled Water: Equivalent to 0.5% of the replacement value of deprec iable capital assets for the potable and recycled water systems . Based on the 2019 Asset Management Plan, the replacement value of the potable water system is currently estimated at $1.5 billion, yielding a minimum reserve balance of $7.5 mill ion; and the replacement value of the recycled water system is currently estimated at $346 million, yielding a minimum reserve balance of $1.7 million.

Sewer: Equivalent to 0.5 percent of the replacement value of depreciable capital assets for the sewer system. Based on the 2019 Asset Management Plan, the replacement value of the sewer system is currently estimated at $780 million, yielding a minimum reserve balance of $3.9 million.

Target Level
Water and Recycled Water: Equivalent to 1 % of the replacement value of depreciable capital assets for the potable and recycled water systems. Based on the 2019 Asset Management Plan, the replacement value of the potable water system is currently estimated at $1.5 billion, yielding a minimum reserve balance of $15.0 million; and the replacement value of the recycled water system is currently estimated at $346 mill ion, yielding a minimum reserve balance of $3.5 million.

Sewer: Equivalent to 1% ofthe replacement value of depreciable capital assets for the sewer system . Based on the 2019 Asset Management Plan, the replacement value of the sewer system is currently estimated at $780 million, yielding a minimum reserve balance of $7.8 million .

Events or Conditions Prompting Use of the Emergency Capital Component The emergency capital reserve component may be used in an emergency event requiring the need to fund necessary capital e xpenditures (e.g., natural disaster causing significant damage to the distribut ion or collections system).

2.6 Rate Stabilization
The rate stabilization reserve component provides a source of funds to smooth rates or avoid rate increases in the event of short - or mid-term disrupt ions to revenues such as drought -related demand reduct ions. The minimum and target levels are set based on a percentage of expected user rate revenues. The selected percentages reflect the revenue risk associated with potential decreases in water demands. The potential demand decreases assumed for each reserve level are informed by an analysis of customer usage data and the CMWD drought response plan.

Minimum Level
The percentage assumptions for the min imum levels are set to provide sufficient reserve funds to cover a demand reduct ion of appro ximately 15%, which is the average of the conservation targets for drought response levels 1 and 2 as described in the drought response plan. Because a greater share of sewer revenue is generated through fixed charges, they are less sensitive to changes in demands and therefore the percentage for sewer is lower than for potable water and recycled wate r.

FINAL I JANUARY 2023 I 6
Item #11 Page 31 of 39

WATER, SEWER,AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNICIPAL WATER DISTRICT Water and Recycled Water: Equal to 10% of budgeted rate revenues in each fiscal year.

Sewer: Equal to 5% of budgeted rate revenues in each fiscal year.

Target Level
The percentage assumptions for the minimum levels are set to provide sufficient reserve funds to cover a demand reduction of approximately 30%, which is the average of the conservation targets for drought respo nse levels 2 and 3 as described in the drought response plan. That reduction would reflect usage roughly equivalent to the average usage in the three lowest demand months of the year. Because a greater share of sewer reven ues is generated through fixed cha rges, they are less sensitive to changes in demands and therefore the percentage for sewer is lower than for potable water and recycled water.

Water and Recycled Water: Equal to 20% of budgeted rate revenues in each fiscal year.

Sewer: Equal to 10% of budgeted rate revenues in each fiscal year.

Events or Condit ions Prompting Use of the Reserve
The rate stabilization reserve component may be used to cover une xpecte d changes in operating revenues and changes in operating costs to reduce year-over-year volatility in needed rate increases.

FINAL I JANUARY 2023 I 7
Item #11 Page 32 of 39

WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNICIPAL WATER DISTRICT Section 3

POTENTIAL RESERVE PROCEDURES
Along with component minimums and targets, most reserve policies for public utilit ies include proce dures related to the use and replenishment of reserves, report ing and oversight, and updates to reserve metrics, minimums, or targets.

3.1 Procedures for the Use and Replenishment of Reserves Procedures for the use and replenishment of reserves may lay out how reserve funds can be used if they exceed the minimum or target values, what authorization is needed to use the funds, and what steps must be taken if reserves fall below the minimum or above the target. The specific procedures used vary by agency particularly on the level of involvement of the governing body in reserve decisions and the types of authorizations requ ired to make reserve-related decisions . In developing the specific reserve policy that is presented to the City Council and the CMWD Board of Directors, the City and the CMWD should tailor the procedures to best match how it wishes to manage the finances of the utilities and the reserves. One example of potential procedural language is shown below.

Use and Replenishment Example:
''The City or the CMWD's potable water, recycled water, and sewer utilities will treat the minimum reserve levels as practical reserve floors and allow reserves to increase or decrease as necessary within the minimum and target levels prescribed above.

To the extent that unrestricted, undesignated reserves are above the minimum and below the target, the utility has the flexibility to utilize those available funds to pay for capital projects (reducing the need for future debt), pay down unfunded liabilities such as pension obligations, decrease outstanding debt, or fund other strategic objectives. No other action would be required if reserves are between the minimum and maximum levels unless directed by the City Council or the CMWD Board of Directors.

If reserve funds exceed the target level, the utility would seek City Council or CMWD Board of Directors approval to use the excess to finance capital improvements on a pay-as-you-go basis, pay down existing debt, offset other long-term liabilities such as pension obligations, reduce rates, or for other strategic purposes .

Reserve levels below the minimum targeted reserves would leave the City/CMWD exposed to significant operational risks. Should a utility draw down reserves below the minimum targeted level, it will implement plans to return reserves to their minimum targeted levels within a set timeframe. Such plans will be provided to the City Council or the CMWD Board of Directors for approval within 12 months of occurrence."
a ca FINAL I JANUARY 2023 I 8
March 7, 2023 Item #11 Page 33 of 39
WATER, SEWER,AND RECYCLED WATER RESERVE STUDY \ CITY OF CARLSBAD & CARLSBAD MUNICIPAL WATER DISTRICT

3.2 Procedures for Reporting and Oversight
Some agencies' reserve policies have provisions related to monitoring, reporting, and modifying reserves. If the City or the CMWD wishes to include such provisions in its reserve policy, it can tailor them to fit within the financial reporting and management procedures that are already in place to minimize additional administrat ive effort . One example of potential procedural language is shown below.

Reporting and Oversight Example:
"Reserve levels will be monitored during the fiscal year and reported in annual financial reports or presentations. Reserve minimum and target levels will be analyzed annually, and an over/under reserve determination shall be made in conjunction with year-end financial results.

These results will be reported to the City Council and the CMWD Board of Directors as part of the year-end financial report presentation. Should unrestricted designated or undesignated reserve levels need adjustment due to new risk factors or due to changes in the industry, these will be brought to the City Council and the CMWD Board of Directors as part of the year-end report.

The Policy will be reviewed annually and updated (at a minimum once every three years) if there are material changes in the risk exposures or new conditions that require changes in reserve levels."
FINAL I JANUARY 2023 I 9
Item #11 Page 34 of 39
WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARl5BAD & CARLSBAD MUNICIPAL WATER DISTRICT Section 4

PROJECTED RESERVE PERFORMANCE
The following figures show the projected reserve performance of each utility over the next 10 years. The projections were completed using the rate models developed for the 2021 rate study, assuming the long term rate revenue increases shown in Table 2. Because each system has different capital needs to maintain or expand its infrastructure, the reserve performance as compared to the proposed policy minimum and targets differs across each utility .

Table 2 Projected Rate Revenue Increases
I

FYE I FYE I FYE I FYE I FYE I FYE I FYE I FYE I FYE I FYE I FYE I FYE I FYE I FYE SySt em 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Potable 2.0% 2.0% 2.0% 2.0% 2.0% 6.0% Water 6.0% 6.0% 6.0% 6.0% 5.5% 5.5% 5.5% 5.5% Recycled
Water 4.0% 4.0% 4.0% 4.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 5.0% 5.0% 5.0% 5.0% Sewer 20.0% 20.0% 20.0% 4.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 1.0% 1.0% LO% 1.0% The following figures present each system's performance project ions based on the minimum and target levels for each reserve discussed above. These minimum and target levels are flexible depending on the City or the CMWD's needs and should be considered a starting point established from other agency averages.

The water utility would maintain reserve above the minimum through FYE 2029 as shown in Figure 1. The same figure indicates that the potable water utility will retain target level reserves until FYE 2026 as it draws down reserves for capital investment in infrastructure, long-term projections show the reserves exceeding the minimum level by FYE 2035.

VI
$120
C:
~ $100
:E
s8o
s6o
$40
$20
s-
Total Potable Water Reserves
......... --.-------------
If iiii-111-111

FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 - Modeled Reserve Balance - Total --- Target - - Minimum Figure 1 Minimum and Target Levels for Total Reserves Projection - Potable Water FINAL I JANUARY 2023 I 10
March 7, 2023 Item #11 Page 35 of 39

WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNIQPAL WATER DISTRICT After the initial spend-down for cash funding of capital, the potable water utility's total reserves would remain within the 180 days to 365 days of cash on hand range for the overall reserve goal as shown below in Figure 2.

Potable Water - Days Cash on Hand <>~"'"'
~
1000Days ~
900 Days
800 Days
700 Days
600 Days
500 Days
400 Days
300 Days
200 Days
100Days
Days

FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 - Modeled Days Cash - - - Target Days Cash Goal - - Minimum Days Cash Goal Figure 2 Projected Reserves as Days of Cash on Hand - Potable Water The recycled water utility would maintain the reserves above the target level through FYE 2028 and above the minimum level through FYE 2035 as shown in Figure 3. The increase in reserves for FYE 2023 results from expected State Revolving Fund loan draws to reimburse for projects that were previous ly cash funded as well as grant receipts for capital projects .

V, $25
C
~ S20
i
s15
$10
s5
s-
Total Recycled Water Reserves
---------------·
_______ ..

HIHI

FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 - Modeled Reserve Balance - Total - - Target - - Minimum Figure 3 Minimum and Target Levels for Total Reserves Projection - Recycled Water FINAL I JANUARY 2023 I 11
March 7, 2023 Item #11 Page 36 of 39
WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARL58AD & CARLSBAD MUNICIPAL WATER DISTRICT After the initial spend-down for cash funding of capital, the recycled water utility's total reserves would remain within the 180 days to 365 days of cash on hand range for the overall reserve goal, as shown in Figure 4.
1200Days
1000Days
800 Days
6ooDays
400 Days
200 Days
Days
~"., Recycled Water - Days Cash on Hand
ro°><:>
'),o ;A.,
<::l'
~ Oj

FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 - Modeled Days Cash - - Target Days Cash Goal - - Minimum Days Cash Goal Figure4 Projected Reserves as Days of Cash on Hand - Recycled Water Due to the large amount of anticipated investments in the sewer infrastructure using cash-funded capital, the City is projected to draw sewer reserves below the minimum level starting in FYE 2023, as shown in Figure 5. Reserves would cont inue to decrease through FYE 2026 before beginning to rebound. Long-term projections show reserves exceeding the minimum by FYE 2033.

VI $30
C:
0 $25
~
$20
sis
$10
ss
$-
Total Sewer Reserves
--------... - -- - -- - -
1 ■ --- ■■ 11

FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 - Modeled Reserve Balance -- Target - - Minimum
Figure 5 Minimum and Target Levels for Total Reserves Projection - Sewer FINAL I JANUARY 2023 I 12
March 7, 2023 Item #11 Page 37 of 39

WATER, SEWER, ANO RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUNIOPAL WATER DISTRICT Expressed as days of cash on hand, sewer reserves would be drawn down to a minimum of 33 days in FYE 2026 before rebounding over the next several years. Tota l days of cash on hand would meet the overall policy goal of 180 days starting in FYE 2029. Projected sewer reserves as days of O&M are shown in Figure 6. <:;)?,--\"'
800 Days '\o'o
700 Days
600 Days
500 Days
400 Days
300 Days
200 Days
100 Days
Days
- DaysCash
Sewer - Days Cash on Hand
- - - Target Days Cash Goal - - Minimum Days Cash Goal
Figure 6 Projected Reserves as Days of Cash on Hand - Sewer FINAL I JANUARY 2023 I 13
March 7, 2023 Item #11 Page 38 of 39

WATER, SEWER, AND RECYCLED WATER RESERVE STUDY I CITY OF CARLSBAD & CARLSBAD MUN ICIPAL WATER DISTRICT Section 5

CONCLUSION
This Policy provides direction to the water, recycled water, and sewer utilities' management and staff for decisions and recommendations related to the financial profiles of each utility.

In its most abbreviated form, this Policy sets targets for reserve balances based on the risk profiles of the potable water, recycled water, and sewer utilities and establishes tolerable maximums . This Policy also provides recommended actions when reserves deviate from the target levels.

FINAL I JANUARY 2023 I 14
March 7, 2023 Item #11 Page 39 of 39
( Carlsbad
Municipal Water District
C cityof
Carlsbad
ITEM 11: UTILITIES RESERVE POLICY

PROPOSED ACTIONS

1. Adopt a City Council resolution adopting a Utilities Reserve Policy for the wastewater enterprise fund

2. Adopt a Carlsbad Municipal Water District Board of
Directors resolution adopting a Utilities Reserve Policy for potable water and recycled water enterprise funds
Ccarlsbad
Municipal Water District
{ city of
Carlsbad
ITEM 11 : UTILITIES RESERVE POLICY

BACKGROUND
Council has set a sound reserve policy for the General
Fund.

Water and wastewater utilities are managed as
enterprise funds that are fully funded by ratepayers
and do not use any General Fund dollars .

It is best practice for utilities to operate with their own reserve funds and these funding goals need to
be established using best practices specific to utilities.

Ccarlsbad
Municipal Water District
C cityof
Carlsbad
ITEM 11: UTILITIES RESERVE PO LI CY

BACKGROUND
Reserves are needed to maintain smooth rates in the face of unforeseen circumstances and costs out of our control.

Should not be too high or too low.

Half of the operating budget is dependent on expenses such as the cost of water and the contracted costs to treat
wastewater .

Any problems with our system can affect public health and the environment .

Ccarlsbad
Municipal Water District
{city of
Carlsbad
ITEM 11:UTILITIES RESERVE POLICY

RESERVE POLICY BENEFITS
l?nn Maintain the short and long-term financial
lQ1J.1J health of each utility
~ Maintain stable rates for customers
$
Fund unanticipated cost contingencies
Ensure funds exist for timely payment of
bills and system improvements
Act as a significant positive credit factor in
bond and other credit ratings
ITEM 11: UTILITIES RESERVE POLICY

EXPLANATION & ANALYSIS
• Utilities reserve policies typically consist of
multiple components set based on operational,
capital and financial metrics.
• Standard and Poor's looks for strongly rated
agencies to hold an average cash on hand
minimum of approximately 200 days.

Ccarlsbad
Municipal Water District
{city of
Carlsbad
ITEM 1 1:UTILITIES RESERVE POLICY

RESERVE POLICY COMPONENTS
$
Operating/working capital (days
cash on hand}
Debt service
~ c ·1 • G:IED ap1ta construction
0 ~ Emergency capital
ii;.
¢;? Rate stabilization
ITEM 11: UTILITIES RESERVE POLICY

FUND USES WITH A RESERVE

POLICY IN PLACE
• If reserve funds exceed the target level, staff would seek City Council or Board approval to use the excess
for expenses such as capital improvements or offsetting future rate increases.
• Council could also correct low reserves via rate
increases or spending changes.
• If a reserve policy is adopted, we will update our
financial models, which will inform future rate
increases.

Potable Water
;..' Q~
1000 Days of'
Potable Water - Days Cash on Hand
900 Days
800 Days
700 Days
600 Days
500 Days
400 Days
300 Days
200 Days
100 Days
Days
<:>"b4,'?
,:,.',,<t, c::,"b4,"
· 11·1· 1■·•·-· ,,·,
FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030 FYE 2031 FYE 2032 FYE 2033 FYE 2034 FYE 2035 - Modeled Days Cash - - - Target Days Cash Goal - - Minimum Days Cash Goal Recycled Water
Recycled wate r - days cash on hand
1200 Days
1000 Days
800 Days
600 Days
400 Days
200 Days
Days
FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030 FYE 2031 FYE 2032 FYE 2033 FYE 2034 FYE 2035 - Modeled Days Cash - -- Target Days Cash Goal - - Minimum Days Cash Goal Wastewater
Wastewater - days cash on hand
800 Days ;..'
<:?
~"'"
700 Days
600 Days
500 Days
400 Days
300 Days
200 Days
100 Days
Days
<:::}'"'\~
- ---------------------------------~ -~~---
• ~-~ -, ■ 111
FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030 FYE 2031 FYE 2032 FYE 2033 FYE 2034 FYE 2035 - Days Cash - - - Target Days Cash Goal - - Minimum Days Cash Goal ITEM 11: UTILI T IES RESERVE POL I C Y

PROPOSED ACTIONS

1. Adopt a City Council resolution adopting a Utilities Reserve Policy for the wastewater enterprise fund

Carlsbad City CouncilMarch 25, 2025

Carlsbad City Council
March 25, 2025